FTSE 100 in pessimistic mood as householders’ job security fears rise

  • FTSE 100 index drops 180 points
  • IHS Markit UK Household Finance Index for September was unchanged from August at 48.0.
  • Job security perceptions dipped further into negative territory, with the index sliding to 39.9, IHS Markit reports

10.45am: Pessimism reigns in British households

The IHS Markit UK Household Finance Index for September was unchanged from August at 48.0.

The index is intended to anticipate changing consumer behaviour accurately and it is one of those indices where a value below 50 indicates deterioration and a value above 50 indicates improvement.

"Pressure on household finances in the UK remained intense in September. The headline HFI figure was unchanged on the month and well below the 50.0 threshold, signalling another sharp deterioration in the financial situation of UK households.

"With just over a month to go until the end of the government furlough scheme, the survey measure of job security perceptions dipped further into negative territory, reflecting households unease about their jobs, whilst incomes from employment fell for the sixth month in a row,” said Lewis Cooper, an economist at IHS Markit.

"September data also signalled reductions in household spending, savings and cash availability, all of which highlight the crunch on finances at present. As a result, UK households were the most pessimistic since May with regards to their financial wellbeing in 12 months time.

"Given the latest figures and the recession the UK is facing during the pandemic, there is undoubtedly a long and uncertain road ahead for UK households to recover financially,” he added.

September IHS Markit #UK #Household Finance survey finds 18.7% of households expect next #BankofEngland move to be to cut #interest rates (20.9% in August). 53.2% expect a rate hike within a year (48.9% in Aug) while 66.8% expect a hike within 2 years (62.6% in Aug #interestrate https://t.co/aUjQ9xJpq3

— Howard Archer (@HowardArcherUK) September 21, 2020

The FTSE 100 was down 180 points (3.0%) at 5,827.

10.15am: Encouraging house price data overshadowed by lockdown fears

The latest Rightmove House Price Index indicated house prices rose 0.2% in September from August and were up 5.0% on September 2019.

“Increased competition for second-stepper homes has pushed prices to a record this month for those looking to take the next step up the ladder. Needing more space has always been the most popular reason for moving house, but now theres a new urgency for extra space to be able to work from home, which means that there are different sets of buyers competing for the same type of property,” said Tim Bannister, the director of property data at Rightmove.

“When comparing with last year, its remarkable that two regions have already caught up with and overtaken the number of sales agreed across the year so far, and if the market continues at its current pace then we could see all areas of England break even over the next month or so. We know that some people are now choosing to move out of London altogether, but these latest figures show that theres still plenty of activity in the outer areas of the capital. The market remains challenging in Zone 1, as the benefit of living within walking distance of an office in the City has dropped down buyers wishlists for now,” he added.

The FTSE 100 was down 191 points (3.2%) at 5,816.

9.40am: No nostalgia for March 23 lockdown spirit

Just four Footsie stocks are defying the trend as investors get a touch of the old March 23 lockdown revisited vibe.

Precious metals miner Fresnillo Plc (LON:FRES) is top of the pile, up 2.5% at 9,898.48p, despite gold and silver prices falling away this morning.

Also on the up are home delivery experts Just Eat Takeaway.com (LON:JET) and Ocado Group PLC (LON:OCDO), up 2.3% and 1% respectively.

The defensive allure of supermarkets means the grocers get off relatively lightly in todays big sell-off but only Tesco PLC (LON:TSCO), up 0.9%, is actually in credit.

The FTSE 100 is down 172 points (2.9%) at 5,836.

“In the UK, London's Mayor Khan is expected to request more wide-sweeping lockdown measures due to the Covid-19 curve moving in the wrong direction.

“Another worrying sign for the market is the UK's chief medical officer Chris Whitty and chief scientific officer Patrick Vallance will give a press conference at 1100 BST. The PM will not be there,” said Stephen Innes, the chief global market strategist at AxiCorp.

The scholarly PM – Prime Minister – is perhaps busy reading up on the reign of King Cnut and in particular his rebuke of fawning courtiers who overstated the extent of his executive powers.

Or perhaps not.

“The UK media widely reports that they will say that the country is heading in the wrong direction with the coronavirus. The press also notes that the government will this week consider whether and by how far to impose new national social distancing regulations,” Innes noted.

Can't wait for Chris Whitty to threaten to ground me

— Sarah Manavis (@sarahmanavis) September 21, 2020

The lockdown reprise is doing no favours to the share prices of British Airways owner International Consolidated Airlines Group SA (LON:IAG) and aeroplane engines maker Rolls-Royce Holdings PLC (LON:RR.).

IAG is down 12.1% at 2,195.83p and Rolls-Royce, which is expected to launch a big fund-raising soon, is off 9.8% at 3,478.69p.

Housebuilders are also getting the cold shoulder as a tightening of lockdown restrictions could nip the revival of the housing market in the bud.

Barratt Developments PLC (LON:BDEV), down 7.2% at 4,825.76p, and Persimmon PLC (LON:PSN), down 6.7% at 5,829.91p, are the hardest hit.

8.40am: Dire start on Monday

The FTSE 100 index saw wiped more than 100 points off in early trade on Monday amid second coronavirus (COVID-19) lockdown fear as Britain teeters on the brink of a return to national house arrest.

The index of UK blue-chips opened 103 points lower at 5,904.10.

Englands chief medical officer, Chris Whitty, via a televised briefing later Monday, is likely to say the country faces a “very challenging winter” with COVID-19 cases headed in the “wrong direction”.

The prime minister, Boris Johnson, meanwhile, is reported to be considering a two-week mini-lockdown in England in a bid to stem the spread of the virus.

“Prospects for a sharp economic recovery have all but disappeared, as global growth receives the new threat of a resurgent pandemic,” said Richard Hunter of Interactive Investor.

“In addition, with talks for a further fiscal stimulus in the US seemingly in deadlock, investors have been choosing to vote with their feet over recent trading sessions given the deteriorating outlook.”

HSBC (LON:HSBA) shares were marked 3.2% lower in early trade, following their drop to a 25-year low in Hong Kong amid money laundering allegations. Standard Chartered (LON:STAN), also named in a Consortium of Investigative Journalists report, fell by the same quantum.

Indeed, it appeared to be open season on the whole banking sector.

Leading the FTSE 100 fallers, however, was the now perennial laggard Rolls Royce (LON:RR.), whose fundraising efforts were revealed in the media over the weekend. The stock dropped 7.7% as it also caught a chill on potential further restrictions on international travel, which will hit its major customer base – the airlines.

As if to underline the point, British Airways owner IAG (LON:IAG) was off 4% in Rolls slipstream.

One of only a handful of risers, Informas (LON:INF) crash to a heavy loss possibly wasnt as dreadful as anticipated judging from the 3.2% jump in the share price of the events and exhibitions group.

In the results statement, chief executive Stephen Carter said that as well as the resilience in the specialist subscriptions, data and content, he was also encouraged by the recovery of Informas physical events business in China, whilst virtual events are “maintaining our brands, developing our digital services and enhancing our data capabilities”.

Among the second-liners, Cineworld (LON:CINE) was off 7.5% amid second lockdown worries.

Proactive news headlines:

[email protected] Capital PLC (LON:SYME) has unveiled the outline terms of a strategic inventory funding agreement for up to €8bn over five years with a new “captive bank”. The fintech group said it has entered into a strategic agreement with a leading European alternative investment firm and its shareholders, 1AF2 and The AvantGarde Group, to acquire the European bank. The objective of the deal is to support the growth of the [email protected] platform, investors were told.

finnCap Group PLC (LON:FACP) has joined the list of companies resuming dividend payments after buoyant first-half trading for the group. In an update, the small-cap broker and corporate finance house said the record trading it had seen in the first quarter of its financial year had continued. As a result, revenue for the six months ending September 30, 2020, will be at least 37% higher at £19.5mln with a significant uplift in profitability on the prior period, the group added.

Power Metal Resources PLC (LON:POW) has acquired a 50% interest in a 2,680 square kilometre portfolio of base and strategic metal project interests in Botswana from Kavango Resources (LON:KAV) to be held in a new strategic joint venture holding company. Consideration for the acquisition payable to Kavango comprises £75,000 in cash, six million shares at a price of 1.25p each and five million warrants at 2p. Also, Power Metal commits to sole funding of US$150,000 over two years for exploration expenditure across the Ditau Camp and Kalahari Copper Belt projects to ensure expeditious and proactive project exploration, with any further expenditure above US$150,000 being funded jointly by Power Metal and Kavango.

Landore Resources Ltd (LON:LND) turned in a £695,000 loss for the six months to end June 2020, almost exactly level with the loss booked for the corresponding period a year ago. The company spent £102,750 on exploration at its highly prospective Canadian portfolio, which includes the BAM gold deposit on the Junior Lake project. Cash at the period end was £79,000. However, the company raised £2.9mln on June 29, 2020, and took delivery of the new funds after the period end. Separately, the company said it is also to acquire half of the 2% net smelter returns royalty held on the Lamaune Lake property for C$150,000 in cash and shares.

Maxcyte Inc (LON:MXCT) has said its full-year revenues are on track to be modestly ahead of current market expectations. The group said the first half of the year saw strong revenue growth driven by high-margin recurring annual fees from its cell therapeutics business, instrument sales and clinical milestone payments. Excluding its investment in its CARMA Cell Therapies subsidiary, the cell-based therapies and life sciences company saw underlying earnings (EBITDA) turn positive at US$0.6mln in the first half of 2020, compared to a loss of US$1.4mln the year before.

Frontier IP Group PLC (LON:FIPP) has noted that its portfolio company Fieldwork Robotics is to develop a cauliflower harvesting robot in collaboration with the Bonduelle Group. Frontier, a specialist in commercialising intellectual property, said the collaboration with Bonduelle, one of the worlds biggest producers of vegetables, is the second application of Fieldwork's patented agricultural robot technology to gain food industry backing. Fieldwork has already made strong progress with a raspberry-harvesting robot in collaboration with Hall Hunter Partnership, one of the UK's biggest soft fruit producers, and is now working with Bosch to optimise the software and design of the robotic arms. Frontier IP holds a 26.7% stake in Fieldwork.

IXICO PLC (LON:IXI) has been selected to provide its brain scan expertise to a trial being conducted by a leading network of Alzheimers research institutions. The UK group will collect and analyse positron emission tomography images generated by the Global Alzheimer's Platform Foundations (GAP) Bio-Hermes study. Its main purpose is the development of a database to investigate biomarkers on a head-to-head basis in conjunction with medical history elements. The trial will include 1,000 volunteers over the age of 60 screened for pre-clinical Alzheimer's as well as prodromal and mild dementia forms of the disease.

Trident Royalties PLC (LON:TRR) has entered into a binding agreement with Fe Limited (ASX:FEL) for the early payment of the second tranche of the consideration for the Koolyanobbing royalty acquisition, in exchange for a A$350,000 discount. As announced on March 25 and June 3, 2020, the second tranche of the payment for Koolyanobbing required Trident to pay A$3mln on June 4, 2021. Under the amended agreement, Trident will instead pay A$2.65mln by September 25, 2020, which will satisfy the obligation related to the second tranche fully. Early repayment of the facility will allow Trident to crystalise an effective annualised 17.5% risk-free return on capital whilst removing the future payment obligation and releasing security currently registered over the Koolyanobbing royalty in favour of Fe Limited.

Falcon Oil & Gas Ltd (LON:FOG) told investors that operations have resumed at the Kyalla 117 N2-1H ST2 well at the Beetaloo project in Australias Northern Territory, with a fracture stimulation of the well. A production test is expected to follow during the fourth quarter, with results due in the first quarter of 2021, the group said. Results from the Kyalla well will help inform an anticipated decision to either further evaluate this liquids-rich gas play or commence activities in the Velkerri liquids-rich gas play, it added.

EQTEC PLC (LON:EQT), a world-leading gasification technology solutions company for waste-to-energy projects, announced on Friday that the joint venture parties have agreed to further extend the exclusivity period of the Billingham Memorandum of Understanding (MOU) until November 22, 2020. The company entered into a conditional MOU on May 8, 2019, with COBRA Instalaciones Y Servicios, its strategic partner for the development of waste-to-energy projects, and Scott Bros. Enterprises Limited to jointly develop the proposed up to 25 MW Billingham Energy waste gasification and power plant at Haverton Hill, Billingham, UK. The Billingham MOU has been the subject of previous extensions, as announced by the company on October 23, 2019, and June 23, 2020. After the extension announced in June, the company said it has progressed the proposed development of the project, including discussions with potential co-developers and funders; instructed and received a full quotation for the grid connection from the grid operator, Northern Powergrid; and completed technical due diligence with insurance providers. The group said the extension of the exclusivity period now is with the aim of finalising the preparation of a legally binding option agreement with Scott Bros which, if agreed, will grant EQTEC and its partners the right, but not the obligation, to purchase the entire issued share capital of Billingham EFW Limited, the Project SPV, from Scott Bros, subject to agreement on consideration and other terms.

Afarak Group PLC (LON:AFRK) (NASDAQ:AFAGR) revealed on Friday that on Wednesday, September 16 creditors of Afarak Mogale (Pty) Ltd voted unanimously in favour of the adoption of the proposed business rescue plan. It noted that the adopted restructuring plan provides for the disposal of the assets of Afarak Mogale (Pty) Ltd and for the proceeds of such disposals to be utilised in settlement of the claims of creditors. The company said it and its advisors will now embark on a process to invite offers for the assets.

Adamas Fin Asia Ltd (LON:ADAM) has announced that further to the announcement on September 10, 2020, there has been a further delay in the receipt of the remaining subscription monies due under the placing. To date, approximately 60% of the committed subscription monies have been received by the company, with one placee's commitment remaining outstanding. The company said it is in contact with the placee and understands the delay is logistical only. Adamas is therefore expecting to receive these outstanding subscription monies shortly, and in any event by no later than September 30, 2020. The company said it will not extend the timetable past this date and should the outstanding subscription monies not be received by such date, it will take the necessary steps to close the open offer and placing forthwith. Consequently, the timing for the company's name change taking effect will occur as soon as practicable after the placing and open offer has been completed.

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