- FTSE 100 rises 7 points
- US indices to open lower
- Coronavirus unease undermining sentiment in the US
US markets are expected to open lower, with unease evident over reports there have been two cases of the South African variant of the coronavirus in California.
The Dow Jones industrial average was expected to slide 47 points to 31,384 while the S&P is tipped to dip 7 points to 3,909.
The Nasdaq Composite is expected to tumble 310 points to 13,716.
It’s not all bad news, however, on the coronavirus (COVID-19) front as the COVID Tracking Project reported 103,000 covid cases in the US yesterday, down 16.9% week-on-week.
The seven-day average has now fallen by 59% from the January 11 peak.
“The week-to-week drop in cases yesterday was the smallest since February 1. That’s not necessarily significant, but the numbers need to be watched very closely over the next few weeks, in light of genomic testing suggesting that the UK variant, B117, now accounts for some 4% of US cases, and as much as 10% in Florida,” said Ian Shepherdson, the chief economist of Pantheon Macroeconomics.
“This variant is much more infectious than the original Covid, and it has quickly become the dominant variant in the UK, Denmark, and Israel, at least. In each of these countries, a modest upward trend in cases rapidly became an alarming surge, which was stopped only by lockdowns, in the UK and Denmark, and a less tight lockdown coupled with mass vaccination, in Israel. The restrictions applied across the US right now, on average, are not tight enough to control B117,” Shepherdson warned.
The focus could well be on cannabis stocks today after a number of high profile stocks came down to earth as the market decided that the apparently inexorable march towards relaxation of US laws on marijuana use may not be so inexorable after all.
In London, the FTSE 100 remains somnolent, up just 7 points (0.1%) at 6,536.
11.00am: Bitcoin bonanza continues
The FTSE 100 is little changed, with the boost from sterling’s decline against the dollar cancelled out by the weakness of miners.
London’s index of leading shares was up one point (0.0%) at 6,530.
If it’s Dullsville, Arizona in the equity markets, the cryptocurrency market continues to be Excitement City, Wyoming with the price of Bitcoin rising US$518 (1.1%) to US$47,461.
“Bitcoin’s journey to [the] sky continues on news that Mastercard and Bank of New York Mellon will now facilitate Bitcoin transactions. Of course, if you buy a Tesla with Bitcoin, it’s good to be able to pay with Mastercard,” quipped Ipek Ozkardeskaya at Swissquote.
“The latter is great news for cryptocurrencies even though, Bitcoin remains a good alternative investment instrument, which is way too volatile to be spent in exchange of goods or services for now.
“Mastercard gained 2.69% as investors greeted the futuristic and bold move, as there is still not a solid legal framework covering the cryptocurrencies,” Ozkardeskaya reported.
10.15am: Ennui continues
London’s index of leading shares crawled into positive territory after gross domestic product data that was not as bad as feared.
The FTSE 100 was up 5 points (0.1%) at 6,533, helped by sterling losing around a third of a cent against the greenback.
UK gross domestic product (GDP) in the final quarter of 2020 is estimated to have grown by 1.0%, following revised 16.1% growth in the third quarter, the Office for National Statistics (ONS) said.
GDP estimates for the quarter are subject to more uncertainty than usual as a result of the challenges the ONS faced estimating GDP in the current conditions.
“Given the combination of lockdown measures in response to the COVID-19 pandemic and the uncertainty surrounding Brexit negotiations over the past year, it’s no surprise for markets that this has translated into a contraction of the economy,” said Olivier Konzeoue at Saxo Markets, who confidently asserted that the decline in GDP in 2020 was the most since ‘the apocalyptic winter of 1709;.
Ah yes, I remember it well.
“It’s worth noting that GDP QoQ [quarter-on-quarter] beat expectations at 1% vs 0.5% surveyed, whilst GDP YoY [year-on-year] highlights the UK economy contracted less than expected at -7.8% vs the consensus of -8.1% and GDP MoM [month-on-month] 1.2% vs 1.0%. This improvement supported by a rebound in the services sector (whereas construction was lagging) strikes some optimism although the widening trade deficit emphasizes the challenges ahead in the short term,” Konzeoue said.
“Overall, most of the recent price action has been focused on the progress of the vaccination campaign as investors are looking forward to Q2 and the prospect of a fast reopening of the economy, with data taking a backseat,” he added.
Meanwhile, the ONS said the total trade deficit for December 2020, excluding non-monetary gold and other precious metals, widened by £0.3 billion to £5.6 billion; imports increased by £0.8 billion and exports increased by £0.4 billion.
The total trade deficit in the fourth quarter (excluding etc.) expanded by £10.9bn to £14.3bn, driven by a widening of the trade in goods deficit.
Increasing goods imports were driven by machinery and transport equipment, chemicals and miscellaneous manufactures in the fourth quarter, the ONS said. Medicinal and pharmaceutical products and car parts were stockpiled in preparation for the EU exit, it added.
9.45am: Quiet start
The FTSE 100 made a quiet start with traders largely ignoring better than expected December GDP reading, and focusing instead on what looks set to be a tough start to the year for the UK.
Even the bullish prediction by the Bank of England’s normally conservative chief economist, Andy Haldane, that the nation is ready to fire on all cylinders post-lockdown wasn’t enough to pique interest in stocks.
“This tentative optimism has not fully washed through yet, however, with the FTSE100 posting a gain of just 0.8% in the year to date,” said Richard Hunter, head of markets at Interactive Investor.
“In the US, markets are edging towards a listless end to the week, as the outcome of political negotiations are awaited on the President’s proposed relief package and with some reports of a Covid variant emerging in California.”
Airline IAG’s (LON:IAG) stock lost altitude as it fell 2.5% ahead of the introduction of tighter quarantine restrictions for international travellers.
One the FTSE 250, lockdown-affected stocks Mitchells & Butlers (LON:MAB), the pub chain, and travel group Carnival (LON:CCL) were off 6% and 4% respectively. This followed a gloom-laden report that restrictions could remain in place until all adults are vaccinated.
Proactive news headlines
FastForward Innovations Ltd (LON:FFWD) said it has invested A$1mln in a placing undertaken by Little Green Pharma Ltd (ASX:LGP), a medicinal cannabis business that supplies the Australian and overseas markets. In a separate announcement late on Thursday afternoon, FFWD said another company in its portfolio, Portage Biotech Inc, has announced its research and development goals for 2021.
Mode Global Holdings PLC (LON:MODE) said it has officially launched the Android version of its popular financial app as it revealed Bitcoin trading volumes on the platform had increased by 130% month on month.
Faron Pharma PLC (LON:FARN) has raised €15mln from an accelerated share placing that will be used to fund its work in the clinic.
Bezant Resources PLC (LON:BZT), the copper-gold exploration and development company, said the acquisition of Metrock Resources, announced last month, has now completed. The company also announced that the application for the exclusive prospecting licence (EPL) 7170 has been successful.
Zephyr Energy Plc (LON:ZPHR) has revealed some details of analysis of the Paradox project, following the initial findings of the State 16-2 well.
MGC Pharmaceuticals Ltd (LON:MXC, ASX:MXC), as the first and currently only medicinal cannabis company to be listed on the London Stock Exchange, is presenting at an investor webinar at 10am today. Chief executive Roby Zomer and executive chairman Brett Mitchell will be presenting and answering questions from attendees: https://voxmarkets.brand.live/c/vox-markets-and-turner-pope-webinar-friday-february-12th.
Oriole Resources PLC (LON:ORR) said 16.875mln new ordinary shares will be issued following an exercise of warrants. They will be admitted to trading on AIM on February 17, 2021, with an exercise price 0.68p apiece.
Landore Resources Limited (LON:LND) announced that it has received a notice to exercise warrants over a total of 500,000 ordinary shares, for which the company has recieved funds of £100,000.
Remote Monitored Systems plc (LON:RMS) provided details for shareholders wishing to view today’s general meeting at 1pm, as shareholders have not been permitted to attend due to government coronavirus restrictions.
Tower Resources PLC (LON:TRP) announced that it has updated its website to reflect the latest information regarding its 50% share in the Algoa-Gamtoos license in South Africa, as anticipated in its announcement of February 8, 2021. The website update contains additional information and diagrams which could not be included in the earlier RNS.
Evgen Pharma PLC (LON:EVG) announced that it is posting a circular to shareholders in relation to its proposed fundraising, including the notice of general meeting, a proxy voting form and an open offer application form. The meeting will be held at 10am on March 3. No shareholders other than the minimum number of board members will be able to attend and so shareholders are requested to complete the form of proxy by the relevant time.
Ariana Resources PLC (LON:AAU) has today published a Q&A document on its website in relation to the circular that was posted to shareholders on February 8, 2021. The Q&A document clarifies certain points concerning the proposed reduction of share capital via a cancellation of the company’s share premium account, the cancellation of the deferred shares and the authority for the company to buy back shares.
7.15 am: GDP grows at a faster than expected 1.2%
UK gross domestic product (GDP) grew by 1.2% in December. Economists had been expecting a rise of 1.0%.
In the fourth quarter, GDP is estimated to have grown by 1.0%, following a revised 16.1% growth in the third quarter.
Despite two consecutive quarters of growth, the level of GDP in the UK is down 7.8% year-on-year, the Office for National Statistics (ONS) said.
On a like-for-like basis, the fall in UK #GDP was probably similar to that in France or Italy. Even on the official numbers, GDP fell further in #Spain (by 11.0%), mainly due to the Spanish economy’s greater dependency on #tourism…
— Julian Jessop (@julianHjessop) February 12, 2021
UK #GDP figures this morning slightly better than expected. 1 percent rise Q4 on Q3 and 9.9 percent drop in 2020 as a whole. Double dip recession avoided for now, but the current quarter is likely to see another dip in activity. The UK economy is not out of the woods yet.
— Andrew Sentance (@asentance) February 12, 2021
Over the year as a whole, GDP contracted by 9.9%, which means it was the worst year on record in terms of a decline in output.
“There has been a further recovery in government consumption and, to a lesser extent, business investment in Quarter 4 2020 reflecting the easing of public health restrictions; however, the levels remain below their pre-lockdown level,” the ONS said.
The stock market appears to have largely taken the data in its stride, with the spread betting quotes for the FTSE 100 easing slightly from around 6,512 before the GDP data to around 6,505 – down 24 points on yesterday’s close.
Pre-open: Soft start expected ahead of GDP data
With a flurry of macroeconomic releases due out today, UK equities are set to open cautiously lower.
Spread betting quotes suggest the FTSE 100 will open some 17 points lower at 6,512.
US equities were broadly firmer yesterday, although the Dow Jones industrial average ended the day seven points lower at 31,321; the broader-based S&P 500 climbed seven points to 3,916.
In Japan this morning, the Nikkei 225 is off 85 points at 29,478.
Meanwhile, it’s the New Lunar Year so all is quiet in Hong Kong – on the stock market, at least.
In the UK, the Office for National Statistics (ONS) is set for a busy morning, pumping out numbers for gross domestic product (GDP), industrial production and UK trade.
Pantheon Macroeconomics reckons GDP rose by about 1.5% month-on-month in December, reversing more than half of 2.6% decline; the consensus forecast is for a monthly increase of 1.0%.
On a quarterly basis, GDP is expected to show a fall of 0.5% after rising 16.0% in the preceding quarter.
Industrial production is tipped to have risen 0.5% in December after falling 0.1% in October, while the increase in manufacturing production is expected to remain unchanged at 0.7%.
In the last set of figures pertaining to pre-Brexit Britain, the visible trade balance is expected to narrow to £15bn from £16.01bn in October, while the overall trade balance is seen expanding to £5.75bn from just under £5bn the month before.
It’s a Friday, so do not expect there to be much in the way of company news.
UBS said the chemicals company’s update will focus on two things: tonnes sold and revenues.
“We estimate tonnes sold of 870, down by just 1% on the prior-year quarter (and compared to FY20 volumes -7%). We estimate revenue to be +3% given the tailwinds from mix (recovery in Invibio, the healthcare franchise) and FX [foreign exchange],” the Swiss bank said.
Around the markets
- Sterling: US$1.3798, down 0.18 cents
- 10-year gilt: 0.472%, down 1.78 basis points
- Gold: US$1,823.80 an ounce, down US$3.40
- Oil: US$60.73 a barrel, down 41 cents
- Bitcoin: US$47,936, up US$93
6.50am: Early Markets – Asia / Australia
Shares in Australia and Japan struggled for gains on Friday as major indices in China, Hong Kong, South Korea and Singapore were closed for the Lunar New Year holiday.
In Australia, the ASX 200 closed 0.63% lower, with the financials, energy and materials sectors struggling for gains, among others.
The Nikkei 225 fell 0.14% after Japanese markets resumed trading following a public holiday on Thursday.
Proactive Australia news:
Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (OTCMKTS:WHELF) directors have demonstrated their confidence in the company’s potash strategy by participating in the company’s recent A$8 million share purchase plan (SPP).
Tietto Minerals Ltd (ASX:TIE) continues to add high‐grade gold intercepts at the 3-million-ounce Abujar Gold Project with latest results of up to 1-metre at 25.19 g/t within 6 metres at 6.27 g/t from 389 metres.
Pantoro Ltd (ASX:PNR) has set the stage for a key year in 2021 with strong ongoing production and robust economics from the Halls Creek Operations in Western Australia’s north providing cashflow for development of the transformational Norseman Gold Project in the state’s south.
BlackEarth Minerals NL (ASX:BEM) is set for a very busy three months ahead as it finalises its Memorandum of Understanding (MoU) with Urbix Inc and moves ahead with its agreement with Luxcarbon GmbH – key milestones on a fast-track to development of its high-grade graphite properties in Madagascar.