- FTSE 100 up 31 points
- Bitcoin rises above US$40k
- Wall Street indexes mixed
5pm: FTSE trims gains but still ends positive
The FTSE 100 ended Monday up 13 points, 0.2%, at 7,147, while the FTSE 250 gained 10 points to 22,745.
“European markets hit new record highs today with the DAX and Stoxx600 both building on last week’s gains,” CMC Markets UK Chief Market Analyst Michael Hewson wrote. “The FTSE100 also moved higher, hitting its best levels this year, and its highest levels since 24th February 2020, before drifting back as US markets opened.
Across the pond, the Dow steadily declined over the morning to a 226 point deficit (0.7%) at 34,257 at midday. The Nasdaq, meanwhile, added 46 points, 0.3%, to 14,116, and the S&P 500 ticked down 10 points, 0.2%, to 4,237.
“US markets have seen a little bit of a mixed open with the Russell 2000 edging higher, while the Dow and S&P 500 appear to be underperforming, as US 10-year yields edge backup after last week’s big drop to a three-month low,” Hewson wrote.
Tesla Inc (NASDAQ:TSLA) shares are up more than 1% to $617.65 after CEO Elon Musk said over the weekend that the company would resume Bitcoin transactions. The cryptocurrency was up more than 12% to $40,689.
4pm: Topping up with oil
A tailwind for the pair comes with crude prices notching up two-year highs, though Shell had some extra gas in the tank from reports over the weekend that it is mulling a potential sale of shale assets in Texas – a deal that could reap more than US$10bn according to the sources that whispered the story to Reuters.
Oil prices are strong despite concerns over a possible Delta variant third wave of coronavirus infections, pointed out market analyst Michael Hewson at CMC Markets.
“Car vehicle use is starting to return to pre-pandemic use in the US and Canada, while in the UK it already has returned to levels just prior to the pandemic as less people use public transport and use their own vehicles to move around. While this is likely to see higher gasoline demand, this should be offset to some extent by lower demand for aviation fuel due to there being less air travel.
“Talk of Iranian sanctions being lifted may well be acting as a bit of a headwind, however its unlikely that Iranian capacity will come back fast enough to slow the advance towards $80 a barrel. The IEA also said it expected oil demand to return to pre-pandemic levels before the end of 2022, ahead of previous predictions.”
Stocks in New York, meanwhile, remain mixed, with the Dow Jones and the S&P 500 lower but the tech stocks of the Nasdaq and the small caps of the Russell 2000 on the up.
Sifting through the names, Novavax (NASDAQ:NVAX) earlier leapt to a six-week high on news that the company’s Covid-19 vaccine is 90% effective – however it will not be submitting its data to the US regulator until the next quarter.
Elsewhere, electric vehicle makeer Lordstown Motors (NASDAQ:RIDE) have skidded another 20% lower, following last week’s news that it does not have enough funding to launch its battery powered pickup truck. Today’s news is that boss Steve Burns and finance chief Julio Rodriguez have both stepped down after the board found evidence of inaccurate statements over pre-orders.
“Having been bought by SPAC DiamondPeak holdings in August with a value of $1.6bn, the proceeds of last year’s deal were supposed to be for the production of the Endurance shares, on the basis of pre-orders valued at $1.4bn. With this figure now in doubt, questions may follow Burns to another one of his company’s, Workhorse Group which has also seen a great deal of volatility in recent weeks,” Hewson said.
Staying in the auto sector, Ferrari (NYSE:RACE) is down 3% on the back of Goldman Sachs slapping a ‘sell’ rating due to worries over production levels and the transition to electric under the new tech-focused CEO appointed last week hitting margins. The Goldman analysts said the broader auto industry is expected to improve global production but they do not expect Ferrari to be a notable beneficiary of this development.
3pm: UK hospitality and leisure stocks tumble
Like a short-lived meal offer scribbled on a gastropub blackboard, gains for the UK’s stock indices have largely been erased ahead of an expected announcement from the PM that lockdown rules won’t fully come to an end next Monday as previously planned.
Boris Johnson is reportedly going to give a speech at 6pm this evening confirmed that the so-called ‘freedom day’ on 21 June will be pushed back four weeks due to concerns over the Delta variant, meaning that sports stadiums, pubs and cinemas will all be stuck with their current capacity limits, while nightclubs will stay closed.
The Commons will vote on the extension over the coming weeks and the Conservative backbenches could rebel, according to the BBC.
However, the furlough scheme will be wound down by the end of this month and Chancellor Rishi Sunak has confirmed he won’t extend it as several businesses requested.
“It’s just four weeks, but for some businesses it will be four weeks too many especially as there are no guarantees 19 July will really bring an end to restrictions,” said market analyst Danni Hewson at AJ Bell.
The FTSE 100 is telling the tale with a falls for Whitbread, but on the FTSE 250 The Restaurant Group and Wetherspoons are all in the red, with investors also seeming to be expecting foreign travel to remain locked up for a while yet, with Wizz Air, EasyJet, IAG, Intercontinental Hotels Group and Rolls-Royce also lower.
On the furlough scheme, Hewson said there are calls for the scheme to be extended into next year, plus a continuation of business rate relief.
“But even if extra help is given there will be those who will miss out as so many sectors will be indirectly affected by the changes. Make no mistake, even for some businesses that have reopened, recovery feels a bit like a carrot being dangled on a stick that keeps being pulled just out of reach,” she added.
“But no one wants the train we are all on to be thrown into reverse, that would have a hugely detrimental impact to the country’s psyche. And so we wait for the inevitable podium moment and hope it’s the last and that this time support measures come immediately and not after anxious days and weeks for those left waiting once again.”
2.42pm: Proactive North America headlines:
Major Precious Metals Corp (CSE:SIZE) (OTCMKTS:SIZYF) (FRA:3EZ) announces C$10M private placement to fund Skaergaard project exploration in Greenlandannounces C$10M private placement to fund Skaergaard project exploration in Greenland
Arizona Silver Exploration Inc (CVE:AZS) (OTCMKTS:AZASF) intersects high grade gold and silver at the Main Claim of the Philadelphia vein
Ipsidy Inc (OTCQB:IDTY) changes its name to authID.ai and adds new leadership in a rebrand to reflect its expertise
Gungnir Resources Inc (CVE:GUG) (OTCPINK:ASWRF) (FRA:AMO1) kicks off geophysics program with an induced polarization survey at the Knaften gold property
Karora Resources Inc (TSE:KRR) enlists partner in push towards net zero emissions target
Aion Therapeutics Inc (CSE:AION) (OTCMKTS:ANTCF) brings in over C$1.4M after closing private placing
Ready Set Gold Corp (CSE:RDY) (OTCPINK:RDYFF) (FRA:0MZ) to receive early repayment of US$1.3M convertible debt and appoints Peter Simeon to its board
AIM ImmunoTech Inc (NYSEAMERICAN:AIM) (FRA:HXB2) says Ampligen featured in medical journal as potential treatment for cancer patients infected with SARS-CoV-2
NEO Battery Materials Ltd (CVE:NBM) (OTCMKTS:NBMFF) inks MOU with Korea Metal Silicon for advancement of low-cost, scalable silicon anodes
2.42pm: Wall Street opens in the red
The main indices on Wall Street opened in negative territory on Monday morning as investors seemed content to keep their powder dry ahead of the Fed meeting later this week.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.17% at 34,419, while the S&P 500 dropped 0.11% to 4,242 and the Nasdaq fell 0.03% to 14,065.
Meanwhile, shares in Tesla managed a slightly positive start to the week, rising 0.4% to US$612.15 in early trading following Elon Musk’s plans to allow the company to accept Bitcoin payments again once the mining process for the digital currency used at least 50% clean energy.
Bitcoin itself also received a bump, rising 12.7% over the last 24 hours to US$40,569.
Back in London, the FTSE 100 had lost some momentum in late afternoon but was still up 10 points at 7,144 at around 2.40pm.
12.40pm: Wall Street to see mixed open
The FTSE 100 halved its gains at midday, with the index up 16 points at 7,150.
US futures are pointing at a mixed open for Wall Street, with the Dow Jones called 15 points lower to 34,342, but the S&P 500 and the Nasdaq to add 2 points to 4,238 and 47 points to 14,032 respectively.
Traders are waiting for the Fed’s announcement on Wednesday to see if it will follow the ECB’s dovish stance expressed last week, with the prospect of cheaper money for longer and a steady flow of stimulus keeping equities underpinned.
“Investors will be scrutinising the announcement and pursuant press conference for any signs the Fed is pivoting away from its stance that the current spike in inflation is temporary,” said Sophie Griffiths, analyst at OANDA.
“Equity markets are broadly buying into the Fed’s mantra that the rise in inflation is transitory. Any sign that central banks are looking to rein in monetary policy could spook investors. Clearly, no central bank is thinking of hiking interest rates just yet. However, the time to start reducing bond purchases could be approaching.”
11.40am: Bitcoin bounces back strongly
While London’s equities meander higher, the crypto market is doing its best as ever to put old school financials in the shade after one of its more severe corrections over the past several weeks.
Many of the moves in cryptocurrencies seem to be caused by external factors, observes market analyst Walid Koudmani at XTB.
The latest boost to Bitcoin comes from perennial crypto advocate Elon Musk, the boss of Tesla, who after talking up Bitcoin earlier in the year recently changed his tone after being confronted with the unsustainability of the blockchain mining process.
Over the weekend, the billionaire tweeted that once there was confirmation that Bitcoin miners were deriving around half their energy usage from clean sources, Tesla would resume Bitcoin transactions for purchases of its products.
As of late morning in Europe, the digital currency had risen almost 10% over the last 24 hours to US$39,161.97.
“In essence, one of the things this seems to illustrate is that while the sector is growing in popularity and credibility, it is still incredibly susceptible to external influences and short term boosts of confidence that seem to disappear almost as quickly as they appeared,” said Koudmani.
Or, as Markets.com’s Neil Wilson says – “This latest tweet only confirms what a crazy relationship Musk has with Bitcoin and his incredible influence on prices” – or Oanda analyst Jeffrey Halley says: “never let the facts get in the way of a good story in the crypto-space”.
10.25am: Oilers on fire
London share prices have calmed down after their initial excitement, with the FTSE 100 up 27 points.
Energy stocks are leading the way in early trade, notes IG market analyst Joshua Mahony, with the likes of Shell in the blue chips and Tullow Oil topping the FTSE 250 along with Cairn Energy.
“Despite ongoing restrictions to global travel, there is a growing belief that energy demand will outstrip supply as major firms are pushed by shareholders into shunning their traditional oil & gas business,” Mahony said.
“Should that shareholder pressure drive down production levels, we could face a shortfall in supply as the world continues its drawn out transition away from carbon. Plans from Royal Dutch Shell to potentially sell their Permian Basin holdings could bring a windfall for shareholders, yet it also does highlight how those seeking exposure to higher energy prices will invariably look towards small caps.”
8.56am: Early jump
The FTSE 100 leapt over 50 points higher to above 7187 in early trading, despite widespread reports that rapidly rising cases of the coronavirus Delta variant in the UK is going to lead to current restrictions being kept for longer.
London stocks shrugged this off to hit their post-pandemic high, although falls for travel related stocks such as air engine maker Rolls-Royce (LON:RR.), British Airways owner IAG (LON:IAG) and Intercontinental Hotels (LON:IHG) have weighed on the index a little since that early exuberance.
The broadly positive mood in equity markets is continuing to override concerns about inflation, said Markets.com analyst Neil Wilson
“Markets are now caught between last week’s big inflation reading and this week’s Fed meeting. Despite the big inflation reading from the US, inflation expectations are not really rising which should allow the Fed to keep its dovish stance,” he said.
The Footsie’s leaderboard is topped by BT Group, where last week Altice UK, a telecoms group founded by billionaire Patrick Drahi, took a 12.1% stake.
“Drahi has always held ambitious return expectations for all of his investments. We struggle to believe he bought into BT on the expectation of delivering a “modest” double-digit return,” JPMorgan said in a note this morning.
Down on the FTSE 250, Serco (LON:SRP) is the top riser after raising its profit estimate for this year as it now expects a larger contribution from the UK government’s controversial ‘test and trace’ programme.
Proactive news headlines
SpectrumX Holdings Ltd is developing an inhaled respiratory treatment with blockbuster potential and has a commercial product that looks set to generate significant near-term revenues. For more information, click here
Tavistock Investments PLC (LON:TAVI) agreed to sell its fund management arm (TWL) for up to GBP40mln to Titan Wealth. The fund group, which will become Titan’s strategic partner and distribute its products, will receive additional payments over a ten-year period equivalent to 50% of future net income on any increased funds under its ACUMEN brand.
Oriole Resources PLC (LON:ORR) has released further results from the recently completed 3,118 metre maiden diamond drilling programme at its 51%-owned Bibemi gold project in Cameroon, including best intersections of 2.45 metres grading 2.96 grammes per tonnes, 3.6 metres grading 1.75 grammes and 12.4 metres grading 0.71 grammes.
Faron Pharmaceuticals Oy (LON:FARN) (First North:FARON) said the US Patent and Trademark Office has granted a new patent protecting the composition of matter of its novel precision cancer immunotherapy drug candidate, bexmarilimab.
Ncondezi Energy Ltd (LON:NCCL) has signed a term sheet with binding exclusivity with Nesa Capital (Pty) Ltd and Nesa Engineering (Pty) Ltd detailing the proposed formation of a new joint venture company to create a leading regional Southern African champion in the commercial and industrial renewable energy and storage sector.
Oracle Power PLC (LON:ORCP)(AQSE:ORCP) has returned highly positive geochemical sampling results from its maiden orientation survey at its 100% owned Jundee East gold project in the Eastern Goldfields region of Western Australia.
Scirocco Energy PLC (LON:SCIR) is to invest GBP1.2mln in Energy Acquisitions Group Ltd (EAG), a vehicle in the sustainable energy sector with plans to acquire an anaerobic digestion (AD) biogas energy project in Northern Ireland.
Block Energy PLC (LON:BLOE) inked a deal with Baker Hughes to support drilling operations in Georgia. The memorandum of understanding (MOU) sets up a partnership enabling progress for its significant oil and gas opportunities, Block said.
Esken Limited (LON:ESKN) provided an update on trading and on its attempted sale Stobart Air and Carlisle Lake District Airport.
Helium One Global Ltd (LON:HE1) has kicked off its drill programme in Tanzania, with the Tai exploration well. It is the first of three planned wells which aims to confirm a significant helium resource.
Spectra Systems Corp (LON:SPSY) announced that, having received only 23 ballots, it does not have enough shareholder votes to achieve a quorum to transact business at its scheduled 2021 annual general meeting on 14 June. The presence in person or by proxy, duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote constitutes a quorum.
Incanthera plc (AQSE:INC) said its annual general meeting on 23 June is to be moved from Manchester to the Marriott Hotel in Derby as the former city has been identified by the government as an area of concern relating to increasing cases of the COVID-19 Delta variant. Investors can still submit questions and follow the meeting via the Investor Meet Platform.
Open Orphan PLC (LON:ORPH) will make a distribution in specie of the entire issued share capital of its wholly-owned subsidiary Orph Pharma IP Company Limited to Poolbeg Pharma Limited, in return for the issue of new shares by Poolbeg to shareholders of Open Orphan on the register at close of business on 17 June 2021. Relevant shareholders will receive one Poolbeg share for every 2.98 ordinary shares held in the company and will not be permitted to sell, transfer or deal in these shares for a period of nine calendar months.
Zephyr Energy PLC (AIM: ZPHR) announced that it will be participating in the Proactive Investors’ One2One Virtual Forum on Thursday 17th June 2021. Chief executive Colin Harrington will make a presentation at 6pm, followed by a Q&A session.
Instem PLC (LON:INS) announced that it will be hosting a virtual capital markets day for retail investors from 2pm to 4pm BST on Thursday 1 July 2021. Management will provide greater insight into the business, its ongoing acquisition strategy and its growth potential, with opportunities for investors to ask questions. A separate virtual CMD will take place on Wednesday 30 June 2021 for institutional investors.
6.45am: Modest start expected
The FTSE 100 is likely to continue to drift higher as we begin the new week, though later today Downing Street is expected to delay the further relaxation of pandemic restrictions.
Concerns about the rising levels of infection in the Delta or Indian variant have, according to reports, led the government to push back the final reopening plans for another four weeks, which traders say will put pressure on the pound.
The Prime Minister will announce later that most current rules will remain in place until mid-July, meaning nightclubs will stay closed and people will be encouraged to keep working from home where possible, the BBC and many newspapers are reporting.
Having already slipped to a one-month low against the dollar last week, a softer sterling will further smooth the way higher for the multinational names of the FTSE, which is expected to open 15 points higher this morning from its 7,134.06 close at the end of last week, according to spread betters on the IG platform.
“The overriding impression from the last few days’ events appears to be that bond markets and investors in general appear to be buying the central bank narrative that the current high levels of inflation are transitory and will soon pass,” said market analyst Michael Hewson at CMC.
He said while this was a seductive narrative, “the wider question is not whether it is true, but whether current central bank policy is currently too loose and needs to be reined in a bit”.
For the next couple of days the market will probably keep its powder largely dry ahead of the Federal Reserve meeting the concludes with a policy decision and press conference on Wednesday.
The Fed, says Hewson, “has the perfect opportunity to reset market expectations with respect to tapering its bond purchases. No one is seriously suggesting a rise in rates yet, but there is scope to reduce the monthly bond purchase amount from the current $120bn a month without jeopardising the recovery”.
Back on these shores, today’s corporate diary has a mid- and small cap theme, with entries from clothes retailer Ted Baker PLC (LON:TED), housebuilder Crest Nicholson Holdings PLC (LON:CRST), recruiter SThree PLC (LON:STEM) and venture capitalist investing pair Augmentum Fintech PLC (LON:AUGM) and Draper Esprit PLC (LON:GROW).