FTSE 100 dips into the red as banking shares come under pressure

  • FTSE 100 down 15 points
  • Marks & Spencer climbs despite losses
  • Vectura receives bid

11.43am: Barclays among the financial fallers

Banking shares have come under pressure and have helped drag the leading index further into the red, albeit not disastrously so.

The FTSE 100 is currently down 15.05 points at 7014.74 as the financial sector seems to feel central banks are a long way from increasing interest rates again to deal with rising inflation.

Even US Federal Reserve vice-chair Richard Clarida, who indicated the bank may start talking about talking about tapering, also suggested current pricing pressures were transitory.

So with not early boost expected from higher rates, Barclays PLC (LON:BARC) is down 1.73%, NatWest Group PLC (LON:NWG) has fallen 1.68%, HSBC PLC (LON:HSBC) has dropped 1.63% and Lloyds Banking Group PLC (LON:LLOY) is 1.56% lower.

10.54am: Chemicals group leads the risers

Croda International PLC (LON:CRDA) is leading the way as the FTSE 100 flips back and forth between positive and negative territory.

The chemicals group is up 3.04% at 7046p in the wake of a positive note from analysts at Goldman Sachs, who have moved from sell to buy and raised their target price from 5750p to 8000p.

Earlier this month the company said it was starting a strategic review of its performance technologies and industrial chemicals businesses, which could lead to them being spun off or sold.

Overall the FTSE 100 is now down just 2.21 points at 7027.58.

Joshua Mahony, senior market analyst at IG, agrees that the Federal Reserve’s view on inflation is a dominant factor.

He said: “European markets have continued the somewhat indecisive theme seen overnight, with both the DAX and FTSE 100 trading largely flat this morning. Despite easing fears around the Indian Covid variant in the UK, we have seen the FTSE 100 continue to tread water.

“There has been a growing theme around Fed tapering taking shape of late, and commentary from Fed vice-chair Richard Clarida furthered the point that we could see the rate of asset purchases trimmed in the coming months. However, Clarida also reiterated the crucial view that while inflation has been moving sharply higher, this continues the be viewed as transitory in nature. For markets, the key question is just how long inflation needs to remain elevated for the Fed to no longer view them as temporary.”

9.55am: Company news helps send market lower

The FTSE 100 is being undermined by some disappointing updates.

Quality assurance group Intertek PLC (LON:ITRK) is the leading faller, down 2.79% at 5782p.

Revenues rose by 2.7% on a like for like basis, although taking into account currency changes, there was a 3% decline. The company said it was on track to deliver its 2021 targets but markets had been expecting more.

British Land (LON:BLND) is also heading lower after it reported a £1bn annual loss and wrote down the value of its property portfolio by 10.8%.

Susannah Streeter, senior investment and markets analys at Hargreaves Lansdown, said: “There is no mistaking the challenge British Land is facing. It’s not only being threatened by the rising tide of homeworking, but like a sandcastle, it faces fresh erosion from the heavy spade of e-commerce…

“The company is recognising that the working from home revolution brought about by COVID-19, isn’t likely to be reversed any time soon. Even when the pandemic subsides, many companies are still likely to allow staff to work remotely, inspiring a reappraisal of their office needs.

British Land has gone upmarket in terms of office space by focusing its efforts on providing top notch campus style developments, including Broadgate and Canada Water in London. By providing a high-end mix of retail, office, meeting and housing space, it aims to give firms the flexibility they need. 

“In retail it’s targeting the value space, increasing investment in retail parks which it sees as a future cash cow, as they have bounced back much more strongly in terms of footfall than town and city centres…

“The quality of its portfolio probably means it’s one of the better placed property companies in the UK, but the disruption ripping through the industry will not leave it undamaged.”

The disruption rippled through to rival Land Securities (LON:LAND), down 0.8% at 699p.

So the FTSE 100 has dipped into negative territory, down 5.46 points at 7024.33.

9.26am: Inflation still in focus for markets

Leading shares are edging higher but it is hardly an earth-shattering move.

The FTSE 100 is up 13.5 points or 0.19% at 7043.29, while the more domestically-focused FTSE 250 is 0.58% better at 22,569, helped by the takeover bid for medicines group Vectura (LON:VEC) and well received results from Marks & Spencer (LON:MKS).

Overall investors are still cautious. While the concerns about inflation have eased a little recently, the attitude of the US Federal Reserve to pricing pressures remains a major talking point in the markets.

The US central bank has been clear it sees the current rises as transitory and has been playing down any imminent moves to curb inflation. But there have been signs that attitude might change before too long.

Neil Wilson at Market.com said: “Vice chair Richard Clarida underscored a change in the tune we have seen since the April meeting minutes were released by saying that the central bank could start tapering in the coming months. “We are talking about talking about tapering,” he told CNBC, a pointed reference to chair Jay Powell’s comments last year when he said the Fed was “not even thinking about thinking about raising rates”.

“So, we have the Fed carefully guiding markets – ‘don’t worry about inflation but at the same time we are going to be exiting full emergency mode’. This offers a bit of a muddy picture for the market that’s reflected in the price action showing no real conviction.” 

8.44am: Subdued start for leading shares

The FTSE 100 made yet another subdued start to proceedings following a ‘down’ session on Wall Street.

Asia’s main markets were a little chirpier with China setting the pace.

In London, it was the twice-annual ‘beat-up’ on Marks & Spencer (LON:MKS). The retailer made a more than £200mln loss in the year just gone as it felt the full brunt of the lockdown, which affected high street trade.

The City’s inclination was to be charitable as the shares were marked up 4.3% in the early skirmishes.

“One irony of a crippling pandemic has been to force change where it was needed at straggling companies, and M&S is a perfect example,” said Richard Hunter, head of markets at Interactive Investor.

“The period of these results bears the full brunt of the various lockdowns and with M&S assuming in their base case that there will be no repeats, the numbers should represent the nadir of their fortunes.

“Overall revenues were marginally higher than expected, with the typical pattern repeating of higher food sales and a sharply declining contribution from the clothing and home business.

“Marks & Spencer attempted to offset the missed income of closed stores by ramping up its online capability and, while this met with some success and a 54% increase in online sales, it was not enough to stem a 56% decline in store sales.”

The day’s big riser, up 31%, was Vectura (LON:VEC), which became the second FTSE 250 company in two weeks to agree to be taken over by private equity.

Carlyle Group will pay just under £1bn for the inhaled medicines group, around a billion less than KKR is handing over for the infrastructure giant John Laing.

Proactive news headlines

[email protected] Capital plc (LON:SYME) said it agreed to buy TradeFlow Capital Management, a Singapore-based fintech-powered commodities trade enabler, in a cash and shares deal. 

Tiziana Life Sciences PLC (LON:TILS, NASDAQ:TLSA) said its breakthrough fully-human monoclonal antibody “induces immunomodulatory effects capable of providing clinical benefit” when administered nasally.

Love Hemp Group PLC (LON:LIFE) (OTCQB:WRHLF) said it has raised £2mln to support its administration and marketing efforts after reporting a record day of sales through its ecommerce site last Thursday.

Caledonia Mining Corp PLC (LON:CMCL, NYSE:CMCL) announced an increase in reserves and resources at its 64%-owned Blanket gold mine in Zimbabwe. Proven and probable reserves increased 1% to 528,000 ounces (or 17% including depletion of 84,925 ounces since the last update in July 2018) and measured and indicated resources rose 12% to 902,000 ounces (or a 23% increase including depletion).

Crossword Cybersecurity PLC (LON:CCS) said it has acquired Verifiable Credentials Limited (VCL), a provider of the Identiproof digital certification and documentation technology, for up to £2.75mln.

SkinBioTherapeutics PLC (LON:SBTX) said a study of people suffering psoriasis that received its immune system-modulating food supplement delivered results that exceeded expectations.

Learning Technologies Group PLC (LON:LTG) said the company is “confident of a strong recovery” in its content & services business in 2021 and that trading so far during the year has been in line with management expectations.

Polarean Imaging PLC (LON:POLX) has noted a study published in journal Radiology outlined how hyperpolarised xenon MRI scans had found abnormalities in the lungs of some COVID-19 patients more than three months – and in some cases, nine months – after leaving hospital, when other clinical measurements were normal. Polarean said it supplied Oxford University Hospitals Trust with an earlier research model that was used for the study and are working towards providing a new state-of-the-art polariser for further research.

Alien Metals Ltd (LON:UFO) said initial results from test leaching at the Elizabeth Hills silver tailings project in Western Australia showed high levels of silver recovery. Alien, which has an exclusive arrangement to potentially buy the project, has extended the exclusivity period with the project owner for a further 45 days.

Eurasia Mining PLC (LON:EUA), a platinum group metals and gold producer, said it completed a private placement yesterday, raising about US$20mln to finance the joint venture with Rosgeo.

Sureserve Group Plc (LON:SUR) has appointed Nick Winks as independent non-executive chairman with immediate effect.

Genel Energy PLC (LON:GENL) noted the receipt of payments from the Kurdistan Regional Government (KRG) covering oil sales in the month of March 2021.

TomCo Energy PLC (LON:TOM) told investors operations can resume at the Greenfield Energy joint venture project in Utah.

Europa Oil & Gas PLC’s (LON:EOG) 30% owned Wressle field, in Lincolnshire, is clear to hit its production target as the project has now has been approved for crude oil storage.

Union Jack Oil PLC’s (LON:UJO) 40% owned Wressle field, in Lincolnshire, is clear to hit its production target as the project has now has been approved for crude oil storage.

The board of Quantum Blockchain Technologies PLC (LON:QBT) informed shareholders that the Court Hearing originally planned for 26 May at the Court of Venice, as announced on 11 March, has been delayed by one day to 27 May.

IQGeo Group Plc (LON:IQG) has appointed Carolyn Rand as an independent non-executive director with effect from 26 May. Rand, who is a Fellow of the Chartered Institute of Management and Accountants and was most recently CFO of Bango, will chair the audit committee.

Metal Tiger PLC (LON:MTR) noted that the Australian Securities Exchange (ASX) has confirmed that it will be admitted to the Official List of the ASX and 9,111,810 Metal Tiger CHESS Depositary Interests (CDIs) will be officially quoted under the ticker ASX:MTR, from 27 May 2021.

MetalNRG PLC (LON:MNRG), a natural resource investing and exploration company, said it entered into an option agreement with BritEnergy Holdings LLP to buy a further 150 shares in BritNRG Ltd,  a special purpose vehicle focused on the development of oil & gas and other energy sector assets, for £545,000. 

RM Secured Direct Lending PLC (LON:RMDL) has declared an interim dividend of 1.625p per share in respect of the period from 1 January 2021 to 31 March 2021. The ex-dividend date will be 3 June and payment date 25 June.

Woodbois Limited (LON:WBI) announced that its annual general meeting will be held on 23 June 2021.

SDX Energy PLC (LON:SDX) notified that it will hold its AGM on 25 June.

6.50 am: Flat start predicted

The FTSE 100 is expected to open mostly flat on Wednesday as investors in London are left searching for direction amid what appears to be a lack of major news that could move markets.

Spread betters IG expect the blue-chip index to open up less than one point after ending Tuesday’s session 22 points lower at 7,029.

The placid start follows a negative finish for Wall Street overnights, with the Dow Jones Industrial Average closing down 0.24% at 34,212 while the S&P 500 dropped 0.21% to 4,188 and the Nasdaq fell 0.03% to 13,657.

However, the negativity may have been offset by a positive performance in Asia this morning, with Japan’s Nikkei 225 rising 0.35% while Hong Kong’s Hang Seng is up 0.78% as inflation fears continued to ease.

The one area which may provide some fireworks in the cryptocurrency markets as the third day of the Consensus industry conference kicks off.

On currency markets, the pound was up 0.11% against the dollar at US$1.416, although there seems little in the macroeconomic diary today that could provide any movement catalysts.

Around the markets:

Sterling: US$1.416, up 0.11%

Brent crude: US$68.70 a barrel, up 0.07%

Gold: US$1,906 an ounce, up 0.43%

Bitcoin: US$39,418, up 2.6%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly higher on Wednesday as the Reserve Bank of New Zealand announced it would maintain the current stimulatory monetary settings until its inflation and employment targets are met.

The Shanghai Composite in China gained 0.22% and Hong Kong’s Hang Seng index lifted 0.80%

In Japan, the Nikkei 225 rose 0.36% while South Korea’s Kospi gained 0.03%.

Shares in Australia dipped, with the S&P/ASX 200 trading 0.05% lower.


Proactive Australia news:

Horizon Minerals Ltd’s (ASX:HRZ) drilling results from the Windanya and Baden Powell project areas have enhanced the company’s golden pipeline being progressed in Western Australia.

Creso Pharma Ltd’s (ASX:CPH) (FRA:1X8) target acquisition company Halucenex Life Sciences Inc has entered into a consultancy agreement with US-based scientific consultancy HeteroGeneity LLC to progress a US market entry strategy for the potential use and licensing of botanical psilocybin products and compounds.

South Harz Potash (ASX:SHP) has secured permission from landowners and tenants for the first of two planned drill holes at the Ohmgebirge potash mining licence area in Germany and has applied for regulatory approval with regulatory authority Thüringer Landesamt für Umwelt, Bergbau und Naturschutz (TLBUN).

SenSen Networks Ltd (ASX:SNS) (OTCQB:SNNSF) has entered into a share purchase agreement for the acquisition of 100% of the issued share capital in Scancam Industries Pty Ltd, Australia’s leading provider of AI anti-theft solutions to fuel retailers.

Mako Gold Ltd (ASX:MKG) has extended Tchaga prospect strike length to 1.8 kilometres on the Napié Project in Côte d’Ivoire with the latest shallow, high-grade results to be included in an upcoming maiden resource estimate.

Orthocell Ltd (ASX:OCC) has been granted patents for its CelGro® collagen rope in China and Hong Kong, bringing the number of countries it is patented in to five.

Walkabout Resources Ltd (ASX:WKT) (FRA:N6D) has been accepted into the European Raw Materials Alliance (ERMA), a membership, which aligns with the company’s commitment to improve the resilience of critical supply chains and energy security.

Venture Minerals Limited (ASX:VMS) (OTCMKTS:VTMLF) has commenced drilling at Mount Lindsay on the high priority tin target delineated along strike to the high-grade Renison Bell Tin Mine, one of the world’s largest and highest grade tin mines.

Antipa Minerals Ltd’s (ASX:AZY) Paterson Province neighbour Newcrest Mining Ltd (ASX:NCM) (TSE:NCM) (OTCMKTS:NCMGF) continues to demonstrate support for the company by maintaining a 9.9% shareholding.


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