- FTSE 100 down 10 points
- Lower start for US stocks
- Johnson & Johnson COVID-19 vaccine deemed effective by FDA
2.45pm: Wall Street opens on the back foot
Despite hopes for a more positive start, the main indices on Wall Street fell into the red at the opening bell on Wednesday
In the first minutes of trading, the Dow Jones Industrial Average was down 0.05% at 31,522, while the S&P 500 slipped 0.2% to 3,873 and the Nasdaq dropped 0.42% to 13,408.
Equities seem to have once again hit the skids on the back of US Treasury yields, which on 10-year bonds hit 1.4% on Wednesday morning.
Testimony from Fed Chair Jerome Powell later will be eyed for any positives that could push stocks back into the green, with many hoping for a reiteration of his previous soft comments on inflation risk and the prospect of interest rate rises as the pandemic subsides.
Meanwhile, there was some positive news on the market for pharma giant Johnson & Johnson (NYSE:JNJ), which rose 0.7% to US$161.93 in early deals after its one-shot coronavirus vaccine was deemed effective by the Food and Drug Administration (FDA).
Back in London, the FTSE 100 had regained some losses into late afternoon but was still down around 10 points at 6,615 at around 2.45pm.
2.15pm: Banks help drag down leading index
Ahead of the Wall Street open, the leading UK index has gone into reverse again.
After edging higher it is now back in the red to the tune of 17.6 points or 0.27%, at 6608.34.
In the banking sector Lloyds Banking Group (LON.LLOY) has lost the early gains it made in the immediate wake of its figures and is now down 1.78% or 0.7p at 38.52p. Meanwhile Metro Bank (LON.MTRO) is even more out of favour, down 14.75p or 9.84% at 135.15p, after it reported a jump in full year losses from £11.7mln to £271.8mln as it was hit by the effects of the pandemic.
Meanwhile the Dow Jones Industrial Average has also lost its early (mild) positivity and is expected to dip around 50 points at the open.
12.45pm: US markets flat but Tesla expected to recover
Wall Street looks like getting off to a subdued start, which will be a relief to those following the technology-heavy Nasdaq market which has fallen for six straight sessions.
Investors have been cashing in their gains on tech stocks and turning to companies likely to benefit from an easing of the global lockdowns.
Rising bond yields and a fall in Elon Musk’s Tesla after it hitched its mast to Bitcoin had also dampened tech enthusiasm. Bitcoin dropped sharply on Tuesday to $45,000 after Musk suggested it was too high, despite Tesla itself investing in the cryptocurrency. But it has bounced back over $50,000 after news that Square, the payments service run by Twitter co-founder Jack Dorsey, had invested another $170m.Tesla also benefitted, and is expected to rise around 4%. The electric carmaker has also been supported by Ark Invest funds which have bought more stock after the recent decline.
So Nasdaq is expected to halt the recent slide and open broadly unchanged, while the Dow Jones Industrial Average is forecast to show a 60 points or so increase to 31,604.
Federal Reserve chair Jerome Powell will be in the spotlight again as he gives his second testimony to Congress. On Tuesday he played down inflation fears and concerns that the central bank could tighten monetary policy and bring back higher interest rates.
Craig Erlam, senior market analyst at OANDA Europe, said: “Jerome Powell will have another opportunity to quell [inflation] fears today but I struggle to see what he can say that he didn’t yesterday. Rather, the greater concern is that he says something that fuels the unease, rather than alleviates it. I don’t see this as likely but it will be interesting to see where markets stand after because we’ve only seen a marginal improvement since yesterday’s appearance.”
Meanwhile the FTSE 100 has drifted higher again, up 15.27 points or 0.23% to 6641.21.
11.35am: Hotels group leads FTSE 100 fallers
Well that didn’t last long.
The FTSE 100 is having a bit of a bumpy ride so far, and has slipped back into the red on continuing inflation fears and the strong pound hitting exporters.
The leading index is down 4.31 points or 0.06% at 6621.63, with InterContinental Hotels Group PLC (LON.IHG) the biggest faller. Its shares are down 172p or 3.29% at 5054p as Deutsche Bank downgraded the group following its figures on Tuesday.
Analyst Andre Juillard said: “Following IHG’s 2020 results yesterday, we updated our forecasts…as well as our recommendation – from Buy earlier to Hold, with price target revised from 5,600p to 5,380p. In our view, the business remains robust, and poised for outperforming the broader accommodation market through its exposure to midscale segment, to high growth geographies (North America and China) and through domestic demand. However, much of this seems in the price now, with the stock having run up around 12-13% year to date.”
10.40am: Property groups help leading index to move higher
After its downbeat start the FTSE 100 has perked up a little and edged into positive territory.
The leading index is up 3.64 points or 0.05% at 6629.58 having earlier fallen as low as 6572.28.
Commercial property companies are among the risers, with Land SecuritiesPLC (LON.LAND) climbing 12.9p or 1.97% to 668.4p and British Land Company PLC (LON.BLND) 9.2p or 1.84% better at 510.4p. The sector has been hit during the pandemic with empty office blocks as most people work from home. But they have been lifted by the hope that some form of normality will return before too long, which would mean some offices starting to see more staff return.
Elsewhere water company Pennon Group PLC (LON.PNN) has dipped 0.27% or 2.4p to 896.8p ahead of its possible demotion from the leading index.
Russ Mould at AJ Bell said: “The latest FTSE 100 reshuffle, the results of which are due to be announced after the close on Wednesday 3 March, could be relatively quiet this time around, with just one demotion and one promotion. Pennon and Weir are the two firms that look most likely to swap places, although grocer Morrison could also head out of the UK’s premier index, opening the way for a FTSE 100 debut for specialist distributor Electrocomponents.
“Much will depend upon the next few days’ trading but it is noticeable how firms whose business models were initially hit hard by the pandemic, such as Weir, Howden Joinery and ITV are inching their way back up the ranks, as measured by market capitalisation, while those who were seen as relatively unaffected or even beneficiaries of lockdowns, such as Pennon and Morrison are sliding down.
9.15am: Banks and exporters put FTSE 100 under pressure
Leading shares continue to head south despite the hopes that tourists may be able to do likewise before too long if the lockdown restrictions are eased as planned.
The FTSE 100 is down 49.75 points or 0.75% at 6576.19 with banks leading the way lower, partly on concerns that an economic rebound could rekindle a rise in inflation. HSBC (LON.HSBA) is down 10.8p or 2.52% at 417.2p and Standard CharteredPLC (LON.STAN) has fallen 1.83% or 9.3p at 498.1p, not helped by a fall in Asian markets following reports the Hong Kong government was looking to raise the level of stamp duty on the trading of stocks.
But Lloyds Banking Group (LON.LLOY) is 1.31% or 0.51p better at 39.74p following its well-received results and an improvement in its performance during the second half.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Pre-tax profit hit £1.2 billion for the year, which although is a 70% fall compared to last year, but still marks a significant turnaround after a very unpalatable first half.”
The pound continues to strengthen, up 0.4% to $1.4175, as investors bet on a UK revival once the lockdown shackles are off. But this is bad news for Britain’s exporters, since it makes their goods more expensive. So Unilever PLC (LON.ULVR) is down 70p or 1.79% at 3850p and British American Tobacco PLC (LON.BATS) has fallen 1.84% or 48p to 2558p.
But travel companies are still in demand as holidaymakers start to book their freedom breaks, with British Airways owner International Consolidated Airlines Group (LON.IAG) up 5.2p or 2.86% to 186.8p. TUI AG (LON.TUI) is up 4.42% or 17.6p to 415.7p while cruise operator Carnival PLC (LON.CCL) has climbed 4.36% or 65p to 1554.5p, helping the FTSE 250 outperform the blue chip index, up 18.3 points or 0.09% to 21,076.02.
8.32am: Inflation worries hit leading shares
The FTSE 100 opened lower amid worries over rising prices with the markets largely ignoring the assessment given by Fed Chair Jay Powell that the inflation outlook was “soft”.
Here in the UK, the enthusiasm around Boris Johnson’s roadmap out of lockdown has largely dissipated.
Jet engine maker Rolls Royce (LON:RR.), a beneficiary from any revival of the international airlines, was up 1.5%.
Top of the Footsie leaderboard was Lloyds (LON:LLOY), which raced ahead 4.1% after a drop in bad loan charges.
Chris Beauchamp, chief market analyst at IG, wasn’t getting too carried away by the latest results.
“The pandemic might have begun to ease, but the economic consequences will remain with us for quite some time,” he said.
“A route out of lockdown is now planned by the government, but only slowly, and as a result, the economic outlook is not likely to improve any time soon.
“Low rates mean profitability will remain under pressure, but at least any further disruption to the UK high street and consumers is likely to be minimal.”
Proactive news headlines
Angling Direct PLC (LON:ANG) said it has “maintained positive sales momentum” across its 2020 financial year despite all of its retail stores being closed for a large portion of the period due to lockdown measures introduced during the coronavirus (COVID-19) pandemic.
Mode Global Holdings (LON:MODE) said it will deliver the first-ever demo of its payments and loyalty solution online on Thursday (Feb 25).
Greencoat UK Wind PLC (LON: UKW) said it had agreed to make acquisitions worth almost £100mln.
Alpha Financial Markets Consulting PLC (LON:AFM) will host a virtual capital markets presentation for institutional investors and investment analysts later today, providing greater insight on its North American and Insurance businesses and their growth potential. A copy of the presentation slides will be available on the company website after the event.
Amryt Pharma PLC (LON:AMYT, NASDAQ:AMYT) will publish its unaudited financial results for the fourth quarter 2020 and full year ended December 31, 2020 on Thursday, 4 March, 2021 at midday London time (7am EST).
Franchise Brands PLC‘s (LON:FRAN) executive chairman Stephen Hemsley and chief financial officer Chris Dent will be presenting at MelloMonday on 8 March 2021, which will take place as a webinar via Zoom. They will also take questions during the event.
Scirocco Energy PLC (LON:SCIR) has made available an audiocast of its latest corporate presentation. It is available on the company’s website and via the following link: https://webcasting.buchanan.uk.com/broadcast/preview/600ff815c4904929abd8221e
6.50 am: Footsie called lower
The FTSE 100 is predicted to start in the red on Wednesday as global markets continued to be rattled by concerns over possible inflation.
Spread-better IG expects the blue-chip index to open down around 50 points after closing on Tuesday with a 14 point gain to 6,625.
Markets appear to be highly uncertain around the outlook for the global economy as certain countries begin considering a return to normalcy following the pandemic, with concerns over inflation proving a particular issue for traders as well as whether some central banks may look to raise interest rates again once businesses begin to reopen.
The lower expected start for the FTSE 100 follows a mixed performance in US markets overnight, with the Dow Jones Industrial Average closing up 0.05% at 31,537 while the S&P 500 climbed 0.13% to 3,881. The Nasdaq was the negative outlier, falling 0.5% to 13,465.
Wall Street was pulled off most of its initial lows by the testimony of Fed chair Jay Powell to the Senate Banking Committee yesterday as he sent no signals he was overly concerned about a recent sharp rise in long term US bond yields while also remaining relatively soft on the inflation outlook.
However, inflation concerns and worries about interest rate hikes hit Asian markets this morning, with Japan’s Nikkei 225 falling 1.43% while Hong Kong’s Hang Seng tumbled 3.13%.
Back in the UK, investors may eye Bank of England governor Andrew Bailey’s comments at the UK Treasury Select Committee this afternoon for any details on how the central bank views the economic and inflationary outlook for Britain.
On currency markets, the pound was up 0.3% to US$1.416 against the dollar, mostly bolstered by hopes the UK may be one of the first major economies to begin easing restrictions this year.
Around the markets:
Sterling: US$1.416, up 0.3%
Brent crude: US$64.99 a barrel, down 0.58%
Gold: US$1,807 an ounce, up 0.07%
Bitcoin: US$49,916, down 1.98%
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were lower on Wednesday following a mixed finish on Wall Street, where the Dow Jones Industrial Average reversed steep losses.
The Hang Seng index in Hong Kong dived 2.91% while the Shanghai Composite in China slipped 1.81%.
In Japan, the Nikkei 225 fell 1.61% while South Korea’s Kospi dropped 2.45%.
Shares in Australia slipped, with the S&P/ASX 200 closing 0.90% lower.
Proactive Australia news:
Galena Mining Ltd (ASX:G1A) (FRA:GM6) has returned more broad high-grade lead-silver results in the fifth and final batch of assay results from the 2020 drilling program at Abra Base Metals Project in Western Australia.
Musgrave Minerals Ltd (ASX:MGV) (FRA:6MU) has received further strong gold results of up to 3 metres at 26.4 g/t from 32 metres at White Heat prospect within the high-grade Cue Gold Project in Western Australia.
Lotus Resources Ltd (ASX:LOT) has received binding commitments to raise A$12.5 million (before costs) through the placement of 100 million shares at A$0.125 per share to sophisticated and professional investors.
Perseus Mining Ltd (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF) (FRA:P4Q) has recorded a 61% increase in group net profit after tax to A$49.1 million in the first half of FY21 compared to the corresponding period in FY20, reflecting its successful transition to a multi-mine, multi-jurisdictional gold producer.
archTIS Ltd (ASX:AR9) has entered a 12-month agreement with the Office of the Australian Information Commissioner (OAIC) for the company’s Kojensi SaaS platform.
Aeris Resources Ltd (ASX:AIS) is trading higher after recording a 260% year-on-year rise in net profit for the half-year ended December 31, 2020, which incorporated the results of the Cracow Gold Operations, acquired on July 1, 2020.
Latin Resources Ltd (ASX:LRS) (FRA:XL5) has confirmed very high-grade halloysite, with grades of up to 37% halloysite, and ultra-bright white kaolin in detailed test-work on samples from the company’s 100%-owned Noombenberry Project in WA.