- FTSE 100 advances 6 points
- US markets to open lower
- GameStop back in the news
The Archegos Capital hedge fund liquidation is not cutting much ice in Blighty but might be more of a big deal stateside.
Spread betting quotes indicate that the major indices will open lower this afternoon.
The Dow Jones industrial average is tipped to shed 47 points at 33,124 while the S&P 500 is expected to retreat 14 points to 3,957. The tech-heavy Nasdaq 100 is seen tumbling 103 points to 12,863.
“Rising yields are once again set to drive market direction, with the growth stocks’ valuations being called into question. Rotation into value looks set to be the trade of the day,” suggested OANDA’s Sophie Griffiths.
Swissquote’s Ipek Ozkardeskaya said the Archegos story continues to dominate the headlines, “as investors question whether the fall of the secretive hedge fund and its financial implications are done and dusted, or is it just the tip of the iceberg, that there are more players out there that have super leveraged positions, that could also go wrong and result in a similar fallout”.
“If we start putting the pieces of the puzzle together, the GameStop saga and the short-squeeze frenzy, the Archegos capital fall, abnormal price rallies in cryptocurrencies and other obscure assets, there is a lesson to be taken. There is too much liquidity in the system, and separate occurrences are a clear sign that the financial markets are fuming, even though there is not an immediate systemic risk to the financial system right now,” Ozkardeskaya said.
Talking of GameStop, the video games retailer has appointed Elliott Wilke as its chief growth officer.
Wilke previously held a number of positions at tax specialist/online retail giant [delete according to preference] Amazon.com.
“At GameStop, Mr. Wilke will oversee growth strategies and marketing, with a focus on increasing customer loyalty and growing the reach of Power Up Rewards and Game Informer,” the company’s announcement said.
As far as economic data are concerned, the focus in the US today is likely to be the Conference Board’s consumer survey for March, according to Daiwa Capital Markets.
“Daiwa America chief economist Mike Moran expects that the disbursement of another round of rebate checks and the expansion of supplemental unemployment benefits probably brightened consumers’ collective mood in March. That said, the expected reading of 96.0 – a lift of 4.7pts – is not especially impressive, as it trails other observations in the current cycle (e.g. 101.4 in October) and is far below the pre-pandemic high of 132.6 in February 2020,” Daiwa said.
“The only other economic reports today are the S&P CoreLogic and FHFA house price measures for January,” it added.
In the UK, the Footsie’s early gains have largely dissipated.
The index is up 6 points (0.1%) at 6,743.
11.20am: IMPS left behind as market advances
The Footsie looks set to end the morning session in positive territory, albeit some way short of its all-time high, unlike Germany’s DAX index.
London’s index of leading shares was up 28 points (0.4%) at 6,764.
“Financial markets are still signalling ‘risk on’, as stocks extend gains in early European trade, with the German DAX rallying to a fresh all-time high,” said Fawad Razaqzada of ThinkMarkets.
“Meanwhile, the US 10-year bond yields have hit a fresh high for the year, while yields on similar maturing debt in Germany and UK have extended gains for the third consecutive day. Underscoring investors’ insatiable appetite for risk, gold was continuing to struggle as it dipped below $1700 again as the opportunity cost of holding the metal rose with yields breaking out. Precious metals were also undermined by ongoing strength of the US dollar, with the greenback also pressurising some emerging market currencies.
Imperial Brands PLC (LON:IMB) failed to join in the advance as a combination of indifference to defensive stocks and a lukewarm reception to its trading statement lopped 1.1% off its share price at 1,495.5p.
Imperial Brands – Full Year Constant Currency Guidance Remains Unchanged
First Half Group Net Revenue Is Expected To Grow By At Least 1 Per Cent On An Organic, Constant Currency Basis
Good Start To Year With Trading In Line With Our Expectations
— LiveSquawk (@LiveSquawk) March 30, 2021
10.15am: No worries (yet) about Archegos
With pundits declaring that the fall-out from the Archegos Capital capitulation has been contained, investors have been happy to chase share prices higher today.
The FTSE 100 was up 39 points (0.6%) at 6,776, with British Airways owner International Consolidated Airlines (LON:IAG), up 4.2% at 200.3p, leading the way.
Utility companies, which were among the better blue-chip performers yesterday, are on offer today, with the likes of Severn Trent PLC (LON:SVT), National Grid PLC (LON:NG.) and SSE PLC (LON:SSE) down by 1% or more.
“Today’s statement is reassuring but necessarily fails to provide full clarity on how Pennon will go about reinvesting the Viridor proceeds but it looks as though whilst Pennon have not signed a deal yet, they may be reaching for the pen,” said Steve Clayton, the manager of the Select UK Income Shares fund at Hargreaves Lansdown.
“The group say that by their full-year results on June 3rd they will either have announced a deal to acquire another UK water company, and Southern Water is the name most often linked here, or they will make a substantial return of capital to their investors.
“In an uncertain world, Pennon looks attractive. Either the most effective management team in the sector will get a major new set of assets to work with, or there will be an upfront cash return. Either way, Pennon looks set to have a busy summer ahead,” Clayton said.
The latest supermarket data from research group Kantar revealed grocery sales in the most recent four weeks were down 3.0% year-on-year. It is worth remembering that a year ago, the nation was just getting into a panic buying fug and toilet rolls were changing hands for £50 each [Are you sure about this? – Ed.]
“Spring’s arrival signals the start of a really interesting period for the grocery market. The anniversary of the first national lockdown means we begin to compare grocery sales against the record-breaking levels seen in the early days of the pandemic and growth has perhaps not surprisingly dipped over the past four weeks as a result. This time last year, Brits were adjusting to schools and offices closing and making extra trips to the supermarket to fill their cupboards for lockdown. To put that into context, shoppers made 117 million fewer trips to the supermarket this month compared with those fraught weeks in March 2020,” noted Kantar’s Fraser McKevitt.
“Tesco increased its sales by 8.5% and once again gained share to capture 27.1% of the market, up by 0.3 percentage points compared with the same 12 weeks last year,” McKevitt noted.
“In the month that CEO Roger Burnley announced he will be standing down later in the year, Asda grew ahead of the market and edged up its market share from 15.0% to 15.1%. Morrisons’ sales growth of 8.7% meant a share increase of 0.1 percentage points to 10.1%, while sales at Sainsbury’s rose by 7.3% to hold share steady at 15.3%.
“Ocado’s sales jumped by 33.9%, taking market share up to 1.9% from 1.5% a year ago,” he added.
NEW: Take-home grocery sales rose by 7.4% during the most recent 12 weeks – a slowdown compared with previous months, as supermarkets start to annualise sales against extraordinary spending in 2020. Read more: https://t.co/SKu1bxZqFY #GroceryMarketShare pic.twitter.com/9PRCly3lmk
— Kantar UK & Ireland (@Kantar_UKI) March 30, 2021
8.50am: Rebound and rotation
The FTSE 100 appeared to be the beneficiary of a rotation out of tech and into cyclical and Covid recovery stocks.
The trend was observed after hours in the US as the ‘analogue’ shares on the Dow, which closed at a new record, outperformed their ‘digital’ equivalents on the NASDAQ, which headed in the opposite direction.
Britain was given a boost as Prime Minister Boris Johnson said on Monday that the economy was on track for the gradual re-opening set out in the government’s road-map.
Sentiment in this regard was further bolstered by news the UK had secured a deal for 60mln new Novavax jabs to be formulated and packed here in the UK, removing supply chain issues posed by the threat of an EU vaccines embargo.
Royal Mail Group PLC (LON:RMG) advanced 2.3% after it said it would pay a one-off dividend thanks to the success of its parcels business.
“The astonishing reversal of fortunes at Royal Mail continues as the momentum of bumper Christmas trading has spilled over into the new year,” said Richard Hunter, head of markets at Interactive Investor.
Proactive news headlines
Catenae Innovation PLC (LON:CTEA) said it responded to the government’s call for evidence on whether coronavirus status certification could play a role in reopening the UK economy, reducing restrictions on social contact and improving safety.
Symphony Environmental Technologies PLC (LON:SYM) said it has concluded a five-year study into its d2w technology with the French Agence National de Recherche, with the study proving “beyond doubt” that the oxo-biodegradable plastic is biodegradable in a marine environment.
S&U PLC (LON:SUS) said recent numbers from its Advantage and Aspen businesses “bodes well” for a rebound in activity this year as the UK emerges from the coronavirus (COVID-19) pandemic.
Silence Therapeutics PLC (LON:SLN) is cashed up and ready to pick up the pace in 2021 after a transformational 2020, it told investors.
Condor Gold PLC (LON:CNR; TSX:COG) said it completed the first 40 drill holes on the La India starter pit infill drilling programme in Nicaragua and that drill results from the Northern Starter Pit include two significant intercepts.
Bango PLC (LON:BGO) has announced the launch of an updated version of its Bango Marketplace platform which provides app marketers access to custom payer audiences to focus their advertising campaigns through its Bango Audiences segments.
Vast Resources PLC (LON:VAST) unveiled a more efficient mine plan for its producing Baita Plai polymetallic mine in Romania as it shifts to mechanised mining and away from more labour-intensive methods.
LoopUp PLC (LON:LOOP) shares rallied as it revealed strong growth in its new cloud telephony business with its pipeline of potential new business now worth £106mln.
Trident Royalties PLC (LON:TRR) is set to complete on the acquisition of the Talga gold royalty, once the consideration shares are admitted to trading. The deal was initially announced on 28 August 2020.
IronRidge Resources Ltd (LON:IRR) announced additional high-grade drill intersections at the Zaranou project in the Ivory Coast, following the results of drilling over the Mbasso, Ehuasso and Yakassé targets.
Greatland Gold PLC (LON:GGP) has applied for two new exploration licences adjacent to the company’s Ernest Giles project in Western Australia. The two applications are for Mount Smith and Welstead Hill and would increase the footprint of the project from 880km2 to 1,950km2.
Westmount Energy Ltd (LON:WTE, OTCQB:WMELF) said 2021 is shaping up to be a significant year for exploration and appraisal operations in the Guyana-Suriname basin with more than twelve exploration and appraisal wells scheduled for the Guyanese sector alone.
Sirius Real Estate PLC (LON:SRE) has promoted managing director Rüdiger Swoboda to a newly created executive role of chief operating officer.
Benchmark Holdings PLC (LON:BMK) notified that it has today listed its existing NOK 850mln senior secured floating rate bond on the Oslo Stock Exchange. A copy of the prospectus, which was approved by the Norwegian Financials Supervisory Authority on 11 March 2021, is available at https://www.benchmarkplc.com/investors/documents-circulars/#documents.
Instem PLC (LON:INS) will announce results for the year ended 31 December 2020 on Monday 12 April 2021. An analyst presentation will be held at 11am on the day, with an investor presentation at 4pm on the Investor Meet Company platform.
Shield Therapeutics PLC (LON:STX) chief executive Tim Watts will present at the Proactive One2One Virtual Investor Forum on Thursday 8 April 2021. Starting at 6pm, Shield will be one of three companies presenting and taking questions on the evening, with registration open here: https://event.webinarjam.com/register/1024/gwwg2hxq9.
6.50 am: Rebound predicted
The FTSE 100 is expected to rebound higher on Tuesday morning after a mixed session on Wall Street overnight.
London’s blue-chip share index has been called 20 points higher by spread-betters on the IG platform, a day after falling 4.4 points to 6,736.17.
The jumbled US session saw the Dow Jones close at new record highs, climbing 0.3% to 33,171.37, ahead of confirmation of President Biden’s infrastructure package tomorrow. Meanwhile, rising US yields restricted the S&P 500 and Nasdaq, which dipped 0.08% and 0.6% respectively.
Ideas to repair physical infrastructure, invest in research & development and support clean energy will be at the centre of the package, the Washington Post reported, while other measures focusing on childcare and healthcare are expected to be unveiled next month.
The plan could include “as much as $4trn in new spending and more than $3trn in tax increases”, according to the WaPo.
US 10-year yields hit a fresh one-year high, with market analyst Michael Hewson at CMC Markets pointing to further impetus from the infrastructure plan and a strong non-farm payrolls report expected on Friday.
“With the end of the month, and the end of the quarter approaching, we can still expect to see a fair amount of volatility over the next couple of days,” Hewson said.
He added: “In light of yesterday’s recovery of the lows today’s European market session looks set to be a positive one, with the DAX set to open at a new record high.”
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Tuesday as Japan’s retail sales declined 1.5% in February from a year earlier, according to data released by the country’s Ministry of Economy, Trade and Industry.
The Hang Seng index in Hong Kong gained 1.04% and the Shanghai Composite in China rose 0.42%.
In Japan, the Nikkei 225 fell 0.08% while South Korea’s Kospi surged 1.01%.
Shares in Australia declined, with the S&P/ASX 200 closing 0.90% lower.
Proactive Australia news:
Moho Resources Ltd (ASX:MOH) has located additional high-grade gold zones at the northern end of the East Simpson Dam (ESD) prospect during phase 2 reverse circulation (RC) infill and extension resource definition drilling.
AVZ Minerals Ltd (ASX:AVZ) (OTCMKTS:AZZVF) (FRA:3A2) has secured a strategic, long-term offtake partner agreement with Yibin Tianyi Lithium Industry Co Ltd for the supply of spodumene concentrate (SC6) from the Manono Lithium and Tin Project in the DRC.
Kin Mining NL (ASX:KIN) (FRA:8KM) has received wide, high-grade assay results from initial reverse circulation and diamond resource definition drilling at Cardinia Hill deposit of its 100%-owned Cardinia Gold Project (CGP) in Western Australia.
Kazia Therapeutics Ltd (ASX:KZA) (NASDAQ:KZIA) (FRA:NV9) has entered into a licensing agreement with Simcere Pharmaceutical Group Ltd (HKSE:2096) to develop and commercialise Kazia’s investigational new drug, paxalisib, in Greater China.