- FTSE 100 index sheds 14 points
- US indices tipped to open higher
- Chancellor of the exchequer unveils new jobs support scheme
12.20pm: US markets set to open higher
US markets are expected to rebound this afternoon despite misgivings about the US economy.
The Dow Jones industrial average is tipped to open at around 26,837, up 74 points.
The S&P 500 is expected to rise 7 points to 3,237 while the NASDAQ Composite, which was the hardest hit of the indices yesterday, is seen rallying to 10,829, up almost 200 points.
The rally is expected even as traders grow tired of waiting for another slug of vodka to be added to the punch bowl – or if you prefer, more fiscal stimulus.
Goldman Sachs has halved its growth forecasts for US economic growth in the fourth quarter to 3% from 6% in recognition that Congress is unlikely to attach additional fiscal stimulus to the continuing resolution.
“This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021,” Goldmans runes readers said.
“An agreement between the Democrats and Republicans is not in sight, and investors are slowly giving up hope that a major stimulus package will be passed ahead of the presidential election in November,” said Milan Cutkovic, a market analyst at AxiCorp.
“Darden Restaurants will be in play today as the company will post its first-quarter results,” said CMC Markets David Madden.
“The hospitality sector has been hit hard by the pandemic. Even though the group saw a colossal rise in takeaways amid the lockdowns, revenue in the fourth quarter still fell by over 40%. Traders will be listening out for commentary in relation to costs –they have typically increased because of health and safety. EPS for the first quarter are expected to be 4 cents,” Madden said.
In London, the FTSE 100 has trimmed its losses some more as the chancellor of the exchequer, Rishi Sunak, gives his press conference.
The index of leading shares was down 14 points (0.2%) at 5,885.
Sunak is announcing a new jobs support scheme to enable companies to save viable jobs.
A key point of the scheme is for people to work a third of their normal hours and to be paid the normal hourly rate for those hours, with the government and the employers covering lost pay.
All employers will be allowed to apply for the new arrangements, which start in November, irrespective of whether they used the furlough scheme.
From 1 November, for the next six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. pic.twitter.com/8NpIKpQV8y
— HM Treasury (@hmtreasury) September 24, 2020
To continue supporting more than 150,000 businesses and to protect 2.4mln jobs, the Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
The application deadline for all coronavirus loan schemes – including the future fund – has been extended to November 30,
Lenders have been enabled to offer Coronavirus Business Interruption Loan Scheme borrowers more time to make their repayments where needed.
The Self-Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the winter months, covering 20% cent of average monthly trading profits via a government grant, Her Majestys Treasury announced.
11:45am: IG says the pound continues to fight against decline
IG, the CFD trading group, has noted that for the second day in a row the pound (GBP/USD) is fighting to hold above US$1.27.
“If it can find a floor here then a rebound towards US$1.30 may develop, with a rally above US$1.288 marking a breakout from trendline resistance. Further declines below US$1.2674 target US$1.25,” IG analyst Chris Beauchamp said in a note.
11.20am: Housebuilders buoyant; will Sunak throw them yet another bone?
Blue-chip equity prices appear to have bottomed out as traders wait for a press conference from the chancellor of the exchequer, Rishi Sunak, scheduled for 11.45am.
“Even though Smiths Group is the tenth FTSE 100 firm to either re-join or declare its intention to re-join the dividend list, having previously scrapped a planned payment, investors do not seem overly impressed with the engineering conglomerates full-year results, as the shares are the worst performers in the UKs leading stock index today,” said Russ Mould, AJ Bells investment director.
The shares were off 8.1% at 1,316p.
“The understandable lack of any earnings guidance for the 2021 financial year, emphasis on investment for the companys long-term future (which could weigh on short-term profits) and the absence of a firmer timetable for the delayed, and long-awaited, spin-off of the Medical division are all possible reasons for the share price slide,” Mould suggested.
[NEW REPORT] Today Chancellor Rishi Sunak will unveil his plans to protect jobs once the furlough scheme ends. But how much is the coronavirus crisis already costing the govt? Read our new report on the impact of the pandemic on the UK's public finances https://t.co/CGpnlrEq2s pic.twitter.com/OFGbhJyqyk
— Institute for Gov (@instituteforgov) September 24, 2020
Housebuilders continue to defy the trend, possibly on expectations that Sunak will announce this afternoon some measures to keep the home fires burning (to coin a phrase).
“The furlough scheme is due to come to an end next month and what will happen in that regards will be the focus of traders attention. There is speculation about reduced working hours to encourage employers to keep staff on. Wage subsidies have also been mentioned as a possible option,” reported CMC Markets David Madden.
10.00am: United Utilities – today's unlikely glamour stock
The Footsie has pared its early losses but remains in the doldrums as investors fret over the rising second wave of coronavirus (COVID-19) cases.
Londons index of leading shares was down 39 points (0.7%) at 5,860, having dipped to 5,821 at one point.
“In Europe, new restrictions in the UK, France and Spain are also weighing on market sentiment. The governments are trying to implement a "soft" lockdown,” said Milan Cutkovic, a market analyst at AxiCorp.
“However, there is concern that if the corona cases rise continue to rise rapidly – which could well be the case in autumn/winter – more drastic measures will be needed again,” the analyst added.
Housebuilders are defying the trend, clawing back some of this weeks losses while United Utilities PLC (LON:UU.) – the very antithesis of a glamour stock – is enjoying a spell in the limelight, with a 1.6% rise to 865.4p after its trading statement.
— Andrew Duncan (@andrewsduncan1) September 24, 2020
"While some headwinds remain for United Utilities, it was positive to hear today that cash collection has been consistent with pre-COVID targets. The extensive work undertaken by the company to improve cash collection over the last few years will hopefully pay dividends and protect against what will likely be an increase to bad debt once the government support schemes ease," said Harrison Williams, an equity research analyst at Quilter Cheviot.
“United Utilities has a high proportion of inflation-linked debt and is therefore benefitting from the current period of low inflation through lower financial expenses. Whilst beneficial in the short term, investors should note that a continued decline in inflation for a sustained period could put pressure on the groups regulated asset base growth and ultimately its dividend policy. A key driver of the investment case going forward will be the execution against expectations of outcome delivery incentive (ODI) outperformance in the new regulatory period. We believe the stock has upside potential if management can successfully deliver on this.”
Both of its UK bus businesses have continued to see good passenger growth in recent weeks, it added.
8.50am: Down day for Footsie
The FTSE 100 index followed international stock markets sharply lower in early trading on Thursday roiled by concerns over the economic impact of the coronavirus (COVID-19) pandemic.
London's blue-chip benchmark fell 65 points to 5,833.98.
After-hours Fed chair Jerome Powell took aim at US politicians for being too concerned about electioneering to sign off another round of fiscal stimulus.
This simply added to the gloom that precipitated sharp falls overnight in the US with share prices there seemingly starting to factor in the reality – the worlds largest economy is currently rudderless.
Here in the UK, chancellor Rishi Sunak will unveil his latest aid for businesses once the furlough scheme is retired next month.
With around 5 million workers receiving support from the government, and the hospitality sector sunk by the latest round of COVID-19 restrictions, job support of some description is urgently needed.
Sunak will address the Commons from 11.45 am to outline the latest aid programme, which is likely to include a salary top-up scheme.
“The restructuring programme that was announced during the summer is underway,” said David Madden, an analyst at CMC Markets. “Due to the uncertainty surrounding the health crisis, no guidance was offered – which wasnt a surprise.”
After a brief up day, both British Airways owner IAG (LON:IAG) and Rolls Royce (LON:RR.) found themselves back in the sickbay as the outlook for international travel deteriorated. The shares were off 5.5% and 5.3% respectively.
A huge loss and further lockdown warning saw shares in Cineworld (LON:CINE) tank almost 17% in the opening exchanges.
On the up and topping the FTSE 250 risers, however, was Pets at Home (LON:PETS), which added 11% after doing the reverse of Cineworld and upgrading its sales and profit forecasts.
Proactive news headlines:
Integumen PLC (LON:SKIN) has unveiled a new personalised coronavirus breath test, Microtox BT, and a complimentary digital health pass platform which it says has the potential to enable instant real-time testing for the virus.
The AIM-listed firm said the new test, adapted from its wastewater test Microtox PD, can analyse the breath and detect the spike protein of the coronavirus in real-time for those with a high viral load. Following extensive internal testing, the company said the test will now transition to the University of Aberdeen containment level 3 laboratory to undergo tests directly on the virus followed by a joint trial of up to 5,000 participants, results of which are anticipated before the end of the year.
Nuformix PLC (LON:NFX), which repurposes existing drugs for new uses, has struck a commercial deal for one of its promising targets. The firm has granted a company called Oxilio a six-month option over NXP001, which the latter will develop as a cancer treatment. If the option is triggered, Nuformix will receive a “significant upfront payment”, additional development milestones and a royalty on net sales capped at £2mln a year. In return, Oxilio will get a licence to the patent estate and ”know-how” related to NXP001.
Faron Pharma Oy (LON:FARN), the AIM-listed drug developer, told investors it expects data from a global coronavirus (COVID-19) trial involving its Traumakine drug in the final quarter of the year, as the firm posted its half-year results. Traumakine, an intravenously administered interferon beta -1a treatment, is part of the World Health Organisations global SOLIDARITY trial, which involves the drug as a treatment on its own and in combination with others. Faron also noted that its cancer drug development Clevegen is also making good progress through the phase I/II of the ongoing MATINS trial.
Braveheart Investment Group PLC (LON:BRH) has issued an update on the operations of its investee company Phasefocus Holdings Limited, in which it owns a 42.67% stake. The investment group said a switch to online sales meetings and virtual demonstrations for Phasefocus, which develops computational imaging technology, was “proving successful” for its high-value instrument, the Phasefocus Virtual Lens. Braveheart also said the investee firm continues to have a strong sales pipeline for its Livecyte2 instruments and has received orders from customers in Italy, Israel and China as well as software and hardware upgrades to existing Livecyte users at universities in York, Manchester and Hull and other locations.
Directa Plus PLC (LON:DCTA) saw its revenue treble in the first half of 2020 despite the constraints imposed by the coronavirus (COVID-19) pandemic. The period saw the producer and supplier of graphene-based products continue to grow strongly in its key selected industry sectors, securing important new contracts and new intellectual property rights, it told investors in its half-year report. Revenue rose to €2.81mln in the six months to the end of June 2020, up from €894,693 in the first half of last year. Revenue from the group's textiles division declined to €0.54mln from €0.82mln, with the coronavirus pandemic affecting demand. On the plus side, the divisions Co-mask anti-bacterial and anti-viral mask is seeing “significant and growing customer interest”, having received to date orders worth more than €400,000.
OptiBiotix Health PLC (LON:OPTI) said each of its divisions is “currently on course to reach profitability in the current financial year” after a busy start to 2020 commercially. In an outlook statement running alongside its interim results, the specialist in functional foods and ingredients based on good bacteria also told investors it was exploring the potential for “a dual international listing in the USA or other international markets”.
IXICO PLC (LON:IXI) said it has entered a five-year collaboration with the Friedreich's Ataxia Research Alliance (FARA) to become a member of the TRACK-FA neuroimaging consortium, focused on exploring novel imaging markers for Friedreichs Ataxia (FA). FA is a rare genetic disease that causes difficulty walking, a loss of sensation in the arms and legs and impaired speech. The disease can also damage parts of the brain and spinal cord and affect the heart. IXICO, an AIM-listed neuroscience data analytics specialist, said it will support the consortium to implement novel analysis algorithms to provide a trial-ready imaging solution for FA clinical trials.
Block Energy PLC (LON:BLOE) has highlighted significant operational progress with the early production facility (EPF) at the West Rustavi project, in Georgia, where gas sales are expected in the fourth quarter of 2020. Oil production at West Rustavi was suspended in April amidst coronavirus (COVID-19) restrictions, lower oil prices, and to preserve reserves. Today, Block revealed that some US$570,000 worth of crude was sold from its inventory, taking advantage of improving oil prices.
Bango PLC (LON:BGO) has announced a strategic partnership with Evergent, the revenue and customer-life-cycle management software firm. The AIM-listed data-driven commerce specialist said the two companies would work together to expand their over-the-top (OTT) offerings, thereby keeping customers “online and entertained”. OTT services typically include streaming media, such as video on demand, audio streams or even voice over internet protocol services. Evergent is based in Silicon Valley in California and has a software platform that helps companies reduce time to market for products and services, cut down on subscriber churn and run back-office processes more efficiently.
ECR Minerals PLC (LON:ECR) said its wholly-owned Australian subsidiary Mercator Gold Australia has applied for two new exploration licences in eastern Victoria, Australia. The contiguous licences will comprise the Tambo gold project. The areas cover portions of the Swifts Creek/Omeo and Haunted Stream goldfields that have recorded historical gold production of 205,000 and 25,000 ounces respectively, according to figures published by the Geological Survey of Victoria.
Oriole Resources PLC (LON:ORR) told investors it has signed-up drill contractor Capital Limited (LON:CAPD) for a 3,000-metre programme at the Bibemi exploration licence in Cameroon. Mobilisation of crew and equipment is expected to take six to eight weeks, so this maiden drill programme at Bibemi is likely to start during the fourth quarter. The programme is planned include 17 drill holes in Bibemis high-grade Bakassi prospect area, which will account for around 1,940 of the programme. It is also intended that the programme will target the northern end of Bakassi, which remains open along strike.
Gore Street Energy Storage Fund PLC (LON:GSF), the industrial battery investor, saw its net asset value (NAV) increase by 1.7% to 96.2p in the quarter to end June 2020. The trust said its portfolio of UK battery assets did well helped by recent acquisitions while the construction of its Irish assets is on track. The dividend for the quarter is 2p, which is in line with the funds annual target of 7p.
Canadian Overseas Petroleum Limited (LON:COPL) (CSE:XOP) has told investors it is confident that the exploration licence for OPL 226 will be extended, with confirmation expected in the fourth quarter. Earlier this year, in August, shareholders in COPLs Nigerian affiliate executed an agreement to resolve their disputes and that agreement was subject to OPL 226 being extended beyond September 30, 2020. The Nigerian affiliate applied in June to extend the exploration licence and since then several constructive meetings with the National Petroleum Corporation (NNPC). COPL is expecting the extension to be confirmed in the fourth quarter and noted that coronavirus (COVID-19) restrictions are creating delays within the NNPC.
Scancell Holdings PLC (LON:SCLP), the developer of novel immunotherapies for the treatment of cancer, has announced the appointment of Susan Clement Davies as a non-executive director of the company with immediate effect. It added that, for health reasons, Dr Alan Lewis is standing down as a non-executive director with immediate effect. Clement Davies is an experienced life sciences financier with over 25 years of capital markets and investment banking experience, including managing director of Equity Capital Markets at Citigroup Global Markets Limited and most recently until 2018, managing director at Torreya Partners LLC, a global investment banRead More – Source