- FTSE 100 slides 47 points
- Footsie falls below 7,000 level
- US indices set to join retreat
US markets are expected to take a step back when trading starts this afternoon.
Spread betting quotes point to the Dow Jones tumbling 120 points to 34,262m the S&P 500 shedding 14 points at 4,160 and the Nasdaq 100 retreat 58 points to 13,335.
The big macroeconomic event today for US traders is the Empire Manufacturing Index for May, which is expected to dip to 24.0 from 26.3 in April.
“The US dollar is edging higher at the start of the week in risk-off trade. Rising Covid cases in Asia, weaker Chinese economic data and geopolitical troubles in the Middle East are lifting demand for the safe-haven greenback,” wrote Sophie Griffiths at OANDA.
“Still, the US dollar move has been small as investors look ahead to the release of the latest FOMC minutes on Wednesday, particularly in the wake of the very mixed data recently.
“Weak retail sales on Friday reinforced expectations that the Fed will stick to its accommodative stance for longer. Furthermore, US consumer confidence held steady in April, reining in fears of higher inflation. Treasury yields edged back close towards the key 1.60% level. Any move higher in the US dollar is likely to be short-lived,” she added.
In London, the FTSE 100 was down 47 points at 6,997, falling below the 7,000 level. One can only hope it is because the City’s barrow boys are too busy down the old rub-a-dub celebrating the relaxation of lockdown restrictions to trade shares.
11.40am: Bitcoin rallies after Elon Musk’s latest tweet
The Footsie seems to have got itself into a rut but it’s all kicking off in the cryptocurrency world – again.
The FTSE 100 was down 33 points (0.5%) at 7,011, with losses limited by some support for retail stocks such as B&M European Retail SA (LON:BME), J Sainsbury PLC (LON:SBRY) and JD Sports Fashion PLC (LON:JD.).
“Once upon a time, traders used to watch Donald Trump’s Twitter handle like hawks. Now it is Elon Musk’s turn – especially for crypto traders,” said Fawad Razaqzada at ThinkMarkets on the latest Bitcoin lurch.
“After Musk replied to a tweet implying that Tesla had sold or is selling its holding of Bitcoin, the digital currency tanked. BTC/USD fell to a low of almost $42K before it bounced sharply on yet another Tweet from Musk, in which he clarified that Tesla had not sold any of its Bitcoin holdings (yet?). A few of his other tweets confirmed what he had said previously i.e. that he’s looking into other cryptocurrencies that use less than 1% of Bitcoin’s energy and transaction but the damage may already be done – and not just for Bitcoin.”
The Bitcoin price has recovered by US$996 to US$45,058, boosting the net worth of numerous ransomware gangsters across the world.
The amount paid in Bitcoin ransoms increased by 311% last year compared with 2019 https://t.co/trJ4b8K37g
— The Economist (@TheEconomist) May 11, 2021
BREAKING: We have identified the #Bitcoin wallet used by the DarkSide ransomware group to receive ransoms from Colonial Pipeline and other victims. Learn more, including where the bitcoins ended up.. https://t.co/EwakscBUaa
— elliptic (@elliptic) May 14, 2021
“Tesla’s decision to suspend Bitcoin payments on environmental concerns is a hammer blow for the digital currency and there is a risk that other big companies who have adopted Bitcoin may follow suit given how sensitive the issue of carbon footprint has become,” Razaqzada said.
Meanwhile, the Office for National Statistics (ONS) has published its latest data on homeworking in the UK labour market.
In 2020 25.9% of those in employment worked at home at some point in the survey reference week, up from 12.4% in 2019, the ONS revealed.
The groups with the highest rates of homeworking in 2020 were women, those working in information and communication, those residing in or working in London and those in professional occupations, it added.
10.00am: Putting the down into lockdown
After a steady start, London’s index of leading shares has dipped as investors take note of the rising rate of COVID-19 infections in Asia.
The FTSE 100 was down 18 points (0.3%) at 7,026, with aerospace-related stocks back on the naughty step, especially aeroplane engine maker Rolls-Royce Holdings PLC (LON:RR.), which is down 2.6% at 104.82p, and British Airways owner International Consolidated Airlines SA (LON:IAG), which is down 1.6% at 193.76p.
Low-cost airline Ryanair Holdings PLC (LON:RYA) defied the trend, rising 1.0% to €17.03 after it said bookings have picked up recently and it expects air travel to start to recover from the second half of this year.
The airline’s full=year results were slightly ahead of Peel Hunt’s forecasts.
“Ryanair reiterates that it expects FY22E to be close to breakeven, although it states that this is a cautious estimate, and we do not expect to change our €76m net profit forecast significantly,” the broker said.
Concerns that relaxation of lockdown rules might have to be rescinded back here in Blighty are sapping support for the likes of hotels owner Whitbread PLC (LON:WTB) and contract caterer Compass Group PLC (LON:CPG); the former is down 1.8% at 3,124p and the latter is 1.5% weaker at 1,516.5p.
Considering a lot more pubs will be opening the doors today than did so yeaterday, pubs stocks are not attracting much interest. Marston’s PLC (LON:MARS) is down 1.2% at 98.8p and Mitchells & Butlers PLC (LON:MAB) is 1.9% weaker at 309.8p.
“Despite last-minute fears concerning the Indian variant, England entered stage three of its reopening today and there may now be some customers have been in the pub for seven hours already,” said Langton Capital, a specialist on the pubs, bars, hotels and restaurants sector.
“The BBPA [British Beer and Pub Association] reported ahead of the date that 45,000 pubs would reopen ‘serving 3 million pints on Monday, but 2,000 pubs will remain closed.’ It says all restrictions must be removed on June 21st for all pubs to reopen and be given a chance of survival,” Langton Capital noted.
“The BBPA points out that ‘pubs and other parts of the hospitality sector will still face heavy restrictions compared to normal. They will be required to ensure 1 metre plus social distancing is in place, operate by table service only and ensure that face masks are worn other than when sat at a table inside or if outdoors.’ It estimates beer sales will be ‘65% – some 1.6 million pints – lower than a normal Monday pre-pandemic. This is below the break-even point for the majority of pubs, who cannot trade profitably whilst the current restrictions remain in place,” Langton added.
On Monday 17th May, we expect:
45,000 UK pubs to reopen, but 2,000 to stay closed ????
3 million pints to be served, 65% less than normal ????
????ALL restrictions must be removed in pubs by 21st June for them to survive and trade viably https://t.co/zNT40hPPVq
— British Beer & Pub Association (@beerandpub) May 14, 2021
8.40am: Heavy dose of caution
The FTSE 100 opened modestly higher as a further easing of lockdown restrictions provided some cheer.
It followed a mixed opening to the week in Asia with the main markets there consumed by China’s conflicting economic messages.
While retail sales wildly undershot expectations, industrial output from the world’s second-largest economy remained resilient.
Inflation fears continued to bubble in the background, particularly after the most recent forecasts by the University of Michigan, which prompted a brief spike in the 10-year Treasury yield and rises in demand for gold.
Here at home, the focus was on the pub sector, with some hostelries opening on the stroke of midnight to host drinkers who can now consume alcohol and food indoors after previously having to freeze under patio lamps.
The message from Prime Minister, Boris Johnson, was “use a heavy dose of caution” when exercising new-found freedoms.
His words were no doubt prompted by the rise in cases of the super-infectious Indian Covid variant.
Record losses from Ryanair (LON:RYA) had largely been anticipated as the budget airline’s stock rose 1.5% following its annual results.
“There are glimmers spots of hope emerging such as the strong increases in weekly bookings since early April,” said Susannah Streeter, market analyst at Hargreaves Lansdown.
“The accelerating roll-out of vaccine programmes across Europe is giving the airline more confidence that there should be a rebound in business in the second half of the year. In the best-case scenario, with a surge in bookings, the company said it should break even this year.”
Industrial parts group Diploma (LON:DPLM) opened 10% higher after telling the market its profits would be ahead of market expectations.
6.50 am: Drinkers raise an early glass
The FTSE 100 looks set to start in positive territory after a mixed session in Asia earlier.
Sentiment in the region was weighed down by Chinese retail sales data, which undershot expectations; however, industrial output from the world’s second-largest economy remained resilient.
Demand for gold spiked as Friday’s batch of economic data from the University of Michigan on Friday effectively raised the threat level for inflation.
The spectre of higher interest rates briefly pushed the 10-year Treasury yield to a six-week high.
“In an extremely fickle environment markets are continuing to wrestle with the dilemma as to whether the current bout of rising inflation prints is transitory in nature or a harbinger of a much more persistent trend of price increases,” said Michael Hewson, analyst at CMC Markets.
Raise a glass
Here at home, Monday is all about a further lifting of Covid restrictions, including the ban on indoor drinking witnessed by the opening of some pubs from midnight on.
The relaxation may prompt traders to re-look at the recovery stocks including those in the out-of-fashion hospitality and holiday sectors.
On the markets
- Pound US$1.4084 (flat)
- Bitcoin US$43,220.79 (-11%)
- Gold US$1,853.90 (+0.86%)
- Brent crude US$68.70 (flat)
Proactive news headlines
Empire Metals Ltd (LON:EEE) appointed Shaun Bunn to the board as managing director effective from 1 June 2021. Bunn is a metallurgist based in Perth, Western Australia, with over 35 years’ experience in exploration, mining, processing and project development, including over 25 years’ experience in the gold mining sector.
Futura Medical PLC (LON:FUM) raised more than £10mln though its oversubscribed placing of shares at 40p a pop. The company also raised £2mln through an offer at the same price to retail investors on the PrimaryBid platform.
Guild Esports PLC (LON:GILD) said it has launched an online esports training platform, Guild Academy, to drive the growth of its talent pool of future pro players, fanbase, and long-term revenue streams.
4D pharma PLC (LON:DDDD, NASDAQ: LBPS) said it will present phase II data from its Live Biotherapeutic, Blautix, which was used to treat patients with irritable bowel syndrome subtypes IBS-C and IBS-D. It will do so via a poster session at Digestive Disease Week, on May 22 from 12.15pm EDT to 1pm (5.15-6pm BST).
Cobra Resources PLC (LON:COBR) has completed 138 out of a planned 976 holes in its geochemistry sampling programme on the Wudinna gold project in South Australia. The work will aid in in confirming the orientation of known mineralisation at the Barns and White Tank prospects ahead of a reverse circulation drilling programme.
EQTEC PLC (LON:EQT) and MetalNRG PLC (LON:MNRG) are teaming up to acquire and recommission a waste-to-energy plant in Italy. The plant was built around EQTEC’s proprietary and patented Advanced Gasification Technology.
i3 Energy Plc (LON:I3E, TSX:ITE) has announced a new mutually beneficial agreement with Baker Hughes to restructure a contract entered into previously in 2019.
Zoetic International PLC (LON:ZOE) said it is trading profitably as its latest market update revealed it has brought in an additional US$1mln of orders for its Chill CBD smokes and chews in the space of two weeks.
Directa Plus PLC (LON:DCTA) has reported a 144% surge in revenues over 2020 as the maker of graphene-based products said it had maintained its focus on delivering products into its core environmental remediation and textile verticals.
Landore Resources Ltd (LON:LND) said drilling on the BAM gold deposit, part of its Junior Lake property in Canada, is set to resume on Wednesday after being suspended for the spring thaw. Bonanza grade gold has already been intersected during the current drilling programme.
Cornish Metals Inc (LON:CUSN)(CVE:CUSN) lost C$1.6mln during the year to 31 January 2021, as exploration and evaluation work continued on its portfolio of assets in Cornwall. During the financial year the company raised C$2.4mln and used it for a proof-of-concept drill program at the famous South Crofty tin project and for general working capital purposes.
Emmerson PLC (LON:EML) lost £1.5mln in the year to 31 December 2020 as it continued to work up its Khemisset potash project in Morocco. Cash and cash equivalents stood at £1.14mln at the end of a year during which the company made significant operational, corporate and commercial progress towards establishing what it terms “Africa’s first large-scale potash mine”.
Kodal Minerals PLC (LON:KOD) said a mining licence application for its flagship Bougouni lithium project in Mali is advancing and also provided an update on the exploration programme for its Ivory Coast gold assets.
W Resources PLC (LON:ARES) expects to raise about £2.5mln via a placing and will use most of the proceeds to create a permanent solution to the high water levels at its La Parrilla mine in Spain.
United Oil & Gas PLC (LON:UOG), the growing oil and gas company with a portfolio of production, development, exploration and appraisal assets, announces that it has received notices of exercise of warrants to subscribe for a total of 19,650,000 new ordinary shares, which it has issued for an aggregate cash consideration of £315,000.
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Monday as retail sales in China rose 17.7% year-on-year in April, falling short of expectations in a Reuters poll for a 24.9% increase.
The Hang Seng index in Hong Kong gained 0.39% while the Shanghai Composite in China rose 1.02%.
In Japan, the Nikkei 225 dipped 1.17% and South Korea’s Kospi fell 0.64%.
Shares in Australia lifted, with the S&P/ASX 200 trading 0.29% higher.
Proactive Australia news:
Matador Mining Ltd (ASX:MZZ) (OTCMKTS:MZZMF) (FRA:MA3) has completed a secondary listing on the OTCQX market of the OTC Markets in the United States and began trading on Friday, May 14, 2021, under the ticker MZZMF.
Kin Mining NL (ASX:KIN) (FRA:8KM) has updated the mineral resource estimate for the Cardinia Gold Project (CGP) near Leonora, Western Australia, to 30 million tonnes at 1.28 g/t for 1.23 million ounces of contained gold, including updated estimates for Bruno-Lewis and Hobby deposits.
FYI Resources Ltd (ASX:FYI) (OTCMKTS:FYIRF) (FRA:SDL) has been included on the MSCI Australia Micro Cap Index which is designed to measure the performance of the micro-cap segment of companies traded on the Australian Securities Exchange.
Antipa Minerals Ltd (ASX:AZY) and partner Rio Tinto Exploration Pty Limited (ASX:RIO) have increased the resource estimate of the Calibre deposit in Western Australia’s Paterson Province by 62% to 2.1 million ounces of gold.
archTIS Ltd (ASX:AR9) has secured a contract for the deployment of NC Protect within an Australian national security agency.
Galileo Mining Ltd (ASX:GAL) has identified intersections of high-value palladium and rhodium from its existing drill hole database with multiple targets developed through a geological interpretation of prospective contact zones.
Musgrave Minerals Ltd (ASX:MGV) (OTCMKTS:MGVMF) (FRA:6MU) is higher after receiving further strong results from regional aircore drilling at Big Sky prospect along a new gold corridor southwest of Lena at the flagship Cue Gold Project in Western Australia.