- FTSE 100 falls 29 points
- SMT hit by Nasdaq’s dive yesterday
- Jobs market stabilises – for now
London’s leading equities have turned south after a moderately solid start as pundits wonder whether the great tech sell-off has finally begun.
The FTSE 100 index if down 29 points (0.4%) at 6,583, with Scottish Mortgage Investment Trust PLC (LON:SMT), which is heavily exposed to US technology stocks, leading the retreat with a 5.8% fall to 1,194p.
“The Nasdaq fell nearly 2.5% as investors dumped names like Apple and Amazon amid growing concerns about rising inflation expectations, the direction of interest rates and how that would put tech stock valuations into question,” reported Russ Mould at AJ Bell.
“Tech-heavy investment trust Scottish Mortgage has fallen by more than 12% in just over a week and was among the FTSE 100’s worst performers on Tuesday along with other tech names Ocado and Avast,” he noted.
There has been little reaction to this morning’s slew of economic data releases from the Office for National Statistics (ONS).
In January 2021, 83,000 more people were in payrolled employment when compared with December 2020; this is the second consecutive monthly increase, the ONS reported.
The UK employment rate in the three months to December 2020 was estimated at 75.0, 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.
The unemployment rate was estimated at 5.1%, down 1.3 percentage points year-on-year but 0.4 percentage points higher quarter-on-quarter.
Growth in average total pay (including bonuses) among employees for the three months October to December 2020 increased to 4.7%, and growth in regular pay (excluding bonuses) also increased, to 4.1%.
“The Prime Minister has described his plan to ease England’s lockdown restrictions as a ‘one-way road to freedom’ but the weakness of the labour market reveals just how long and hard that road will be,” declared Jack Kennedy (not that one), a UK economist at the job site, Indeed.
“Nearly three-quarters of a million fewer people are in work compared to this time last year, and the unemployment rate continues to creep up,” he noted.
“Yet there are signs of progress, albeit slow. The most recent quarter saw the number of available jobs pick up by 64,000 compared to the previous three months,” Kennedy reported.
The rise in the unemployment rate in Dec is a step towards the 6.5% peak we expect by the end 2021. But if the govt follows the roadmap that it laid out on Monday, then the jobless rate may be back at its pre-pandemic level of 4.0% in 2023.https://t.co/fUbE158ZWE pic.twitter.com/ae2ttEmtuO
James Smith, the economist who covers developed markets at ING, said the jobs market has stabilised but wonders whether this is the calm before the storm.
“With wage support set to be unwound over coming months, it is inevitable that the unemployment rate will increase again over coming months, but by how much?
“We’ll find out more about the plan for the furlough scheme in the budget next week, but an extension beyond the end of April seems inevitable. We may also see extended or more generous support provided to the hardest-hit sectors, to give them time to get back on their feet. A policy that incentivises businesses to bring workers back from furlough also feels likely, akin to the ‘Jobs Support Scheme’ that was originally planned for the winter, and would have provided subsidies for firms that were able to bring staff back part-time,” Smith said.
Whichever way an extension is structured, Smith thinks there will inevitably be some jobs that are no longer viable as a result of the pandemic.
“The latest weekly jobs data indicates there are just shy of a million workers who have been ‘temporarily away from their job’ for at least three months, a rough proxy for those who either work in sectors that have never reopened, or whose jobs aren’t likely to come back,” Smith added.
8.40am: Investors shrug off inflation worries
The FTSE 100 defied inflation worries and rising bond yields to claw back some of the ground lost on Monday.
Boris Johnson’s roadmap out of lockdown, while largely trailed in the weekend media, appeared to put a pep in the step of the price-setters of the Square Mile.
That optimism seemed to spill over into travel-reliant stocks, led by the airline IAG (LON:IAG), up 8.5%, with the BBC reporting a surge in holiday bookings in the immediate aftermath of the PM’s announcement.
Following in its vapour trails were jet engine maker Rolls Royce (LON:RR.), which will benefit from an upturn in fortunes for the carriers, and InterContinental Hotels Group (LON:IHG), which were up 6.4% and 4.2% respectively.
On the FTSE 250, easyJet (LON:EZJ) and Cineworld (LON:CINE), up 8.5% and 7.2%, led the resurgence. Boris’ pub re-opening schedule, meanwhile, didn’t curry favour with investors of Mitchells & Butlers (LON:MAB), down 3%.
HSBC (LON:HSBA) was static after its Asian pivot had been widely leaked to the ‘Sundays’; however, the restoration of the dividend did provide a tonic for Natwest (LON:NWG) and Lloyds (LON:LLOY), up 2.7% and 2% respectively.
Proactive news headlines
OKYO Pharma Limited (LON:OKYO) has been issued a patent for a potential new class of non-opioid analgesics being developed to treat symptoms of neuropathic pain, ocular pain, ocular inflammation and/or dry eye disease.
Crossword Cybersecurity PLC (LON:CCS) said it has signed an agreement with the University of Glasgow (UOG) to support its privacy risk and compliance (PRC) project by creating a new software product aimed at privacy governance. The AIM-listed firm said it will help to design, market test and build the software, which will ultimately be owned by a newly formed separate UOG spin-off business.
Sunrise Resources PLC (LON:SRES) said a 500 tonne sample of pozzolan that was shipped to a large cement and ready-mix company is due to be ground by the end of March and then used in a number of commercial concrete pours. Meanwhile, at the Bakers Gold Project in Australia, Sunrise is moving ahead with plans to drill, with a rig booked for a drill start at the end of March.
Strategic Minerals PLC (LON:SML)(USOTC:SMCDY) is beginning a trenching and auger exploration program to investigate the possible presence of extensions of mineralisation up to 1,000 metres to the west of the presently established resource at the Redmoor project in Cornwall. Multiple prospective targets for tin and copper have been identified as a result of a review of historic exploration data to the west of the Redmoor deposit.
88 Energy Ltd (LON:88E) has highlighted that the Merlin-1 exploration well, in the Peregrine project area in Alaska, is due to spud in early March. The well is targeting a prospect that’s estimated to host some 645mln barrels of oil.
i3 Energy PLC (LON:I3E, TSE:ITE) told investors that production remains predictably stable, averaging 9,150 barrels oil equivalent per day in the period from November 2020 to January 2021.
MaxCyte Inc‘s (LON:MXCT) chief executive, Doug Doerfler, is presenting to two virtual events next month. On March 1, from 1.20 pm ET, he will address the online audience of Cowen’s 41st Annual Health Care Conference. Then it is on the H.C. Wainwright & Co Global Life Sciences Conference on March 9-10.
finnCap Group PLC (LON:FCAP) said it has appointed Oberon Capital, part of the Oberon Investments Group PLC, as a joint broker with immediate effect.
6.50 am: Positivity in the air
The FTSE 100 is expected to recover its small losses from the start of the week after the Prime Minister’s speech about emerging from the current coronavirus lockdown.
London’s blue-chip share index is being predicted to rise around 16 points by spread-betters on the IG platform, a day after slipping just under 12 points or 0.2% to 6,612.24.
Overnight, US stock market indices mostly fell, though the Dow Jones battled over the line to add 27 points or 0.1% to close at 31,521.69.
The S&P 500, however, slid 0.8% and the tech-heavy Nasdaq Composite tumbled 2.5%, with all but one of the top 20 largest companies all moving lower, with the biggest being an 8% decline for Tesla Inc (NASDAQ:TSLA).
“European markets got the week off to a disappointing start on increasing concern about rising bond yields, and what they are telling us about the economic outlook, and the prospects for inflation,” said market analyst Michael Hewson at CMC Markets.
“Today’s European open is likely to see a little bit of a rebound after the declines from yesterday, helped by a positive Asia session, and while optimism abounds about an economic recovery, there still seems to be an abundance of caution about when to look at becoming strongly positive about the prospects for UK and European stocks.”
Analyst Jeffrey Halley at Oanda was more dramatic: “Financial markets have an every-man-for-himself look about them today, as various asset classes diverge in their own directions. A combination of tightening yields and the impending two-day testimony by Fed Chairman Powell starting today in Washington DC seems to have provoked differing reactions across different markets.”
Around the markets
Pound: flat at US$1.4067
Gold: up 0.2% at US$1,813.76
Oil: Brent crude up 0.7% at US$66.28
Bitcoin: down 10% to US$50,167.60
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Tuesday as HSBC reported a profit before tax of $8.8 billion for 2020, a fall of 34% from a year ago.
The Hang Seng index in Hong Kong gained 0.95% while the Shanghai Composite in China dipped 0.49%.
In Japan, the Nikkei 225 rose 0.46% while South Korea’s Kospi fell 0.31%.
Shares in Australia gained, with the S&P/ASX 200 closing 0.86% higher.
Proactive Australia news:
Horizon Minerals Ltd (ASX:HRZ) has generated $1.2 million in net cash after completing the fourth and final milling campaign from trial mining at the Boorara Gold Mine, 10 kilometres east of Kalgoorlie-Boulder in the Goldfields of Western Australia.
Tempest Minerals Ltd (ASX:TEM) has increased its landholding at the Messenger Project in Western Australia with a new extension that covers the historic high-grade Messengers Patch gold production area.
Astro Resources NL (ASX:ARO) has busy work programs planned to advance the Needles Gold Project in the USA as well as the Governor Broome Minerals Sands Project and the Lower Smoke Creek Diamond Project, both in Western Australia.
White Rock Minerals Ltd (ASX:WRM) (OTCQX:WRMCF) has entered into a binding and exclusive term sheet with Thomson Resources Ltd (ASX:TMZ) for a three-stage earn-in and option to a joint venture agreement to progress the Mt Carrington Gold and Silver Project in northeast NSW.
PolarX Ltd (ASX:PXX) (FRA:PX0) is focused on advancing its North American projects at Humboldt Range and Alaska Range this year, aiming to complete due diligence as well as start exploration at both projects.
Maximus Resources Limited (ASX:MXR) (FRA:M5F) has begun drilling at the highly prospective Wattle Dam East nickel target within its Spargoville tenements, 25 kilometres from BHP Group Ltd’s (ASX:BHP) (NYSE:BHP) Kambalda Nickel Concentrator.
Euro Manganese Inc (ASX:EMN) (CVE:EMN) (OTCMKTS:EROMF) (FRA:E06) has secured the support of European Union-backed knowledge and innovation organisation EIT InnoEnergy to accelerate integration of the Chvaletice Manganese Project in the Czech Republic into Europe’s battery supply chain.
Rumble Resources Ltd‘s (ASX:RTR) (FRA:20Z) latest reconnaissance reverse circulation (RC) drilling and mapping program has expanded the large-scale gold-copper-silver system at Amaryllis Prospect within the Munarra Gully Project, Cue in WA’s Mid-West.