- FTSE 100 down 66 points
- Tobacco firms fall
- ABF reports mixed results
11.20am: BT dips on European Super League news
It has been hard to escape news of the proposed European Super League, which includes the so-called Big Six in the Premier League (who in fact occupy positions from one to nine at the moment rather than one to six with two in Champions League places).
Apart from the controversy caused it has also produced some uncertainty for current broadcasters of European football, and analysts at UBS have used the news to repeat their sell rating on BT PLC (LON:BT.).
They say: “With vocal opposition from senior European politicians and domestic football leagues, it is not clear cut that the new Super League will come into being. Nevertheless, the news creates an element of uncertainty and is unhelpful for investor sentiment on BT, which holds exclusive UK rights to the Champions League for the 2021/22 to 2023/24 seasons at a cost of GBP400m pa.
“What is the range of outcomes for BT? Status quo is a possibility given objections from senior politicians. Should the Super League go ahead, the legal ramification around broadcasting contracts for the Champions League rights is unclear. The range of scenarios for BT includes: Paying GBP400m pa for a diminished Champions League; Saving GBP400m pa from not showing Champions League but the impact on broadband/mobile churn is unclear (BT Sport is bundled into many broadband/mobile packages); BT having to pay more to broadcast the new Super League; Another broadcaster acquiring rights to the Super League.
“We remain cautious on BT given its premium valuation to the sector .. and the prospect of rising infrastructure competition from Virgin Media. Other elements of uncertainty include the triennial pension review and the English Football League rights auction.”
BT has dipped 0.26% or 0.4p to 154.25p, although this is a better performance than the overall market at the moment.
The FTSE 100 is currently down 66.28 points or 0.95% at 6933.8.
10.58am: Strong pound hits leading index
Leading shares continue to head lower, with the FTSE 100 down 64.59 points or 0.92% to 6935.49.
The pound hit $1.40 against the dollar for the first time in a month before dipping back slightly, but sterling’s strength is underming the exporters who fill the leading index.
Chris Beauchamp, chief market analyst at IG, said: “Stocks continue to drift lower, hit by a lack of major news that leaves investors waiting for further high profile earnings that might reverse the trend and provide a boost to equity markets.
“Weakness in European markets has been exacerbated by the strength in the euro and sterling, which have enjoyed good gains against the dollar over the past few sessions.”
The weakness in tobacco firms has not helped, nor has a downbeat reaction to results from Primark owner Associated British Foods (LON:ABF), 1.91% or 47p lower at 2413p.
A disappointing update from Hammerson PLC (LON:HMSO) is helping to drag down the mid-cap index. The property group, which owns the Bull Ring centre in Birmingham where key tenant John Lewis has recently closed, said only 40% of rents due in the second quarter had been collected.
Hammerson announced last week it was cutting retail rents by a third while confirming it had put its UK retail parks portfolio up for sale.
Its shares are down 3.82% or 1.45p at 36.55p, while the FTSE 250 has fallen 108.07 points or 0.48% to 22,382.79 despite news of a GBP1bn bid for chemicals group Elementis (LON:ELM).
9.39am: Avast wanted after update
But it certainly is, and not only that, at the moment it is leading the way.
Its shares are up 3.16% or 14.9p at 486.5p after a positive first quarter trading update.
The cybersecurity business said revenues had risen 10.5% at actual exchange rates and adjusted earnings rose 10.3% to $133.7mln. It expects full year revenues to grow at the top end of the 6% to 8% guidance range following the disposal of its Family Safety mobile business on 16 April. With investment in R&D and marketing, margins are expected to remain broadly flat.
Chief executive Ondrej Vlcek said: “Avast has made a good start to the year with continued demand for the company’s security, privacy and performance solutions. The business is trading in line with expectations as we successfully execute on our stated goals to drive customer engagement and monetisation. We look forward to the remainder of the year with confidence.”
Having struggled so long to get to the 7000 level and finally achieving it on Friday, the FTSE 100 has now fallen back below it. The index is now down 33.29 points or 0.48% at 6966.79, partly influenced by a fall in tech stocks in the US on Monday.
Cigarette companies continue to be a drag on the market, with British American Tobacco PLC (LON:BATS) and Imperial Brands PLC (LON:IMB) the two top fallers. BAT is down 162.5p or 5.58% at 2751.5p while Imperial is off 85p or 5.38% at 1496p.
The companies have not been helped by a Wall Street Journal report suggesting the Biden administration is considering telling tobacco businesses to cut the level of nicotine in cigarettes to a level at which they are no longer addictive.
Neil Wilson at Markets.com said: “Would it really make as big a difference as the share price moves suggest? Lower nicotine cigarettes may be less addictive – so the rationale is that this would make it easier for smokers to quit or switch to other ‘safer’ products and therefore be a ‘good thing’. However, consumers may be tended to perceive lower nicotine cigarettes as safer, which could make them easier to sell, which would be the precise opposite of what the administration intends.”
8.33am: Leading shares edge lower
The FTSE 100 opened lower and below 7,000 as traders absorbed some mixed UK employment data (see below).
However, it was the status of the dollar that really seemed to impact the performance of the UK blue-chip index so reliant are its constituents on overseas earnings.
The greenback continued its slide, which affected those paid in the US currency.
Top of the fallers was British American Tobacco (LON:BAT), which dropped 5.4% early on.
One suspects there has been a broker circular out on the sector given rival Imperial Brands (LON:IMB) was also weaker – yet it derives most of its revenues from the domestic market.
On the decline also was the Primark owner Associated British Foods (LON:ABF), whose interims were a mixed bag.
The retail arm enjoyed a record return to business as the doors swung open last week to queues around the block; however, the coming six months are likely to be “softer” for the wider group.
Even the reintroduction of the dividend couldn’t sweeten the mix as the shares fell 3.3% in the opening exchanges.
As Richard Hunter, head of markets at Interactive Investor, said: “Overall, the group has a fight on its hands but has adjusted the factors within its control.”
On the FTSE 250, a GBP1bn from US group Innospec lifted shares in chemicals group Elementis (LON:ELM) 15%.
Proactive news headlines
Franchise Brands PLC (LON:FRAN) made a strong start to the year, it said, with underlying earnings (EBITDA) growing 24% to GBP2mln in the first three months of 2021 as turnover returned to pre-Covid levels towards the end of the period.
88 Energy Ltd’s (LON:88E) quarterly activities update said the Merlin well is able to be re-entered to drill a side-track that could be flow-tested. It comes after the well provided some evidence of oil but due to equipment failure and poor hole conditions, could not be fully tested.
Coinsilium Group Limited (LON:COIN) has updated investors on the memorandum of understanding (MOU) and proposed partnership between its Gibraltar subsidiary Nifty Labs Ltd and Indorse, a Singaporean firm in which it owns a 10% stake.
Gfinity PLC (LON:GFIN) said it has appointed Thomas Preising as its new chief revenue and transformation officer with immediate effect.
Filta Group Holdings PLC (LON:FLTA) added 935 and 750 new customers in the US and UK respectively in 2020, despite the pandemic. The kitchen services provider said the upward trend in business levels in the second half of 2020 has continued into the current year.
DiscoverIE Group PLC (LON:DSCV) expects earnings for the fiscal year just ended to be at the upper end of market expectations.
Kavango Resources PLC (LON:KAV) has identified an electro-magnetic anomaly in Target Area A in the Hukuntsi section of the company’s Kalahari Suture Zone project.
IronRidge Resources Ltd (LON:IRR) has reported additional high-grade lithium pegmatite drill intersections, including multiple drill intersections over 2% lithium oxide, at new targets adjacent to the Ewoyaa lithium project in Ghana.
Brickability Group PLC (LON:BRCK) said it expects to report full-year revenues and earnings “ahead of previous expectations” despite what it said were significant operational challenges caused by the coronavirus (COVID-19) pandemic.
Esken Limited (LON:ESKN) has agreed the sale of Stobart Air and Carlisle Airport to Isle of Man-based Ettyl.
Galantas Gold Corp (LON:GAL, TSXV:GAL) plans to raise as much as C$6,6mln (GBP3.8mln) through a private placement to provide the financing to bring the Galantas gold mine in Northern Ireland into full production and said its chief executive would be stepping down.
BlueRock Diamonds PLC (LON:BRD) reported higher production, grades and prices from its Kareevlei diamond mine in South Africa in the first quarter.
Thor Mining PLC (LON:THR, ASX: THR, OTCQB:THORF) has appointed Nicole Galloway Warland, previously exploration manager, to the board as managing director with immediate effect and announced that Mick Billing will relinquish the role of chief executive.
Union Jack Oil PLC (LON:UJO) told investors the West Newton B-1Z appraisal well has successfully completed cased hole logging and vertical seismic profiling operations. The next phase of work will see a service rig used to perforate and stimulate the Kirkham Abbey formation ahead of flow testing.
C4X Discovery Holdings PLC (LON:C4XD) appointed Simon Harford as a new non-executive director with immediate effect. The boardroom hire adds US and global expertise to the management team.
Vast Resources PLC (LON:VAST) will hold a general meeting at 11.00am on Wednesday 5 May 2021. The purpose of the meeting will be to effect a reorganisation of the company’s share capital.
Trident Royalties PLC (LON:TRR) announced that its annual general meeting will be held on 8 June 2021 in London, with voting to be done by proxy ahead of the meeting. Shareholders will be able to follow proceedings online through the Investor Meet Company platform.
Digitalbox PLC (LON:DBOX) has posted its annual report and accounts for 2020 ahead of its annual general meeting, which will be held at the company’s registered office in Bath on 14 May. Shareholders can only submit proxy votes in advance.
Horizonte Minerals PLC (LON:HZM, TSX:HZM) will host an investor webcast on 7 May at 2pm BST where chief executive Jeremy Martin will provide a corporate update and take questions.
Advance Energy PLC (LON:ADV) will host an investor presentation on 29 April at 7pm BST via the Proactive One2One Virtual Forum. Those wanting to register interest in attending can do so via the following link: https://event.webinarjam.com/register/1048/gwwg2hxy9.
AFC Energy (LON:AFC) will host a virtual capital markets event for investors and analysts on Wednesday 5 May at 2pm BST to provide a full overview of the company’s commercial progress. The CME will be hosted by chief executive Adam Bond, alongside the board’s chief operating officer, chief finance officer and chief engineer and product officer, who will take questions after the presentation.
8.00 am: Employment data
The UK unemployment rate receded to 4.9% in February, according to new data from the Office for National Statistics, from 5.0% in January.
With the government’s job furlough scheme still insulating the labour market from the worst effects of the pandemic, unemployment is still expected to rise later in the year and hit a peak in early 2022.
“Overall, we think that employment may be closer to a trough than most people realise,” says Thomas Pugh at Capital Economics. “And even though we are anticipating a further rise in the unemployment rate, the bulk of that will be driven by those who left the labour force returning, rather than people losing their jobs.”
The FTSE 100 is seen falling more than 13 points at the open, according to traders on the IG platform.
6.45am: FTSE to flop?
The FTSE 100 is expected to take a breather in early trading, as traders await the release of UK unemployment data and some FTSE 100 results later in the day.
Having recaptured the 7,000-point milestone at the end of last week, London’s blue-chip equity index started this week with a bit of a whimper, falling almost 20 points. Traders at CMC Markets have predicted Tuesday will start with the engine in neutral.
Wall Street moved down a gear overnight, led by tech stocks, with the Nasdaq falling 1%, the S&P 500 retreating 0.5% and the Dow Jones dipping 0.3% as banks, energy companies and various consumer-facing companies also lost ground.
Asian markets are currently mixed, with Tokyo’s Nikkei down more than 2% but Hong Kong’s Hang Seng and the Shanghai Composite both in the green.
“It is perhaps not surprising that after the gains seen last week, that we might see some modest profit-taking as we gear up for further big earnings announcements this week, as well as the latest ECB rate meeting on Thursday,” said CMC market analyst Michael Hewson.
Looking to the UK unemployment numbers that will be released shortly, Hewson added that hopes are rising that increases in unemployment will be limited in nature as the UK economy embarks on the process of unlocking from lockdown and business optimism grows.
“In January the ILO unemployment number fell back to 5%, and it isn’t expected to deviate from that when the February numbers are released this morning, though there is a worry we could see the number nudge back up, given the sharp jump higher in the jobless claims number a month ago.
“Nonetheless, various forecasters, including the Bank of England do appear more optimistic about the outlook for unemployment this year revising their forecasts lower once the government starts to withdraw the furlough support that has been in place over the last 12 months.”
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Tuesday as China kept its one-year loan prime rate (LPR) and five-year LPR unchanged at 3.85% and 4.65%, respectively.
The Hang Seng index in Hong Kong gained 0.09% and the Shanghai Composite in China rose 0.31%.
In Japan, the Nikkei 225 fell 2.06% while South Korea’s Kospi gained 0.42%.
Shares in Australia declined, with the S&P/ASX 200 trading 0.68% lower.
Proactive Australia news:
Kazia Therapeutics Ltd (ASX:KZA) (FRA:NV9) (NASDAQ:KZIA) has entered into a worldwide exclusive licensing agreement as well as a master services agreement with Evotec SE (FRA:EVT) – a leading European drug discovery and development company.
Perseus Mining Ltd (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF) (FRA:P4Q) is on track to meet its target of producing 500,000 ounces of gold per annum, following a strong March quarter in which its second Cote d’Ivoire mine began commercial production.
Carnavale Resources Ltd (ASX:CAV) (FRA:YBB) has been granted ministerial consent for the transfer of 100% of the Barracuda Platinum-Palladium-Nickel-Copper Project near Mt Magnet in Western Australia to the company.
Horizon Minerals Ltd (ASX:HRZ) has received high-grade infill and extensional drilling results at the Peyes Farm Gold Project, part of the Teal gold camp northwest of Kalgoorlie in Western Australia, confirming what the company believes to be ‘excellent’ width and grade continuity.