FTSE 100 buoyant as US jobless claims are in line with forecasts

  • FTSE 100 index advances 66 points
  • US indices tipped to open higher
  • US first-time jobless claims declined to 2.12mln last week from 2.44mln the week before

1.35pm: US first-time jobless claims in line with

US first-time jobless claims last week totalled 2.12mln, in line with the consensus forecast, and down from 2.44mln the week before.

Continuing claims fell by 3.9mln to 21mln.

Another 2.1 million Americans file for first-time jobless benefits. That means 41 million people are out of work since the pandemic began. #unemployed #unemployment #CoronaVirusUpdates

— Anthony Leong (@anthonyleong83) May 28, 2020

The FTSE 100 was up 66 points at 6,211 shortly after the release of the data.

1.10pm: The Footsie basking above 6,200

Londons leading stocks are sitting pretty but the weekly jobless claims from the US plus US gross domestic product data could potentially dampen the mood.

The Footsie broke through the 6,200 barrier on the stroke of noon, since when it has risen to 6,209, up 65 points (1.1%).

US jobless claims are expected to be in the region of 2.1mln while the gross domestic product number is expected to be little changed from the flash estimate, which was for an annualised decline of 4.8% in the first quarter.

???????? US GDP

This chart from Goldman Sachs suggests US GDP estimate for 2020 and 2021

h/t @GoldmanSachs #markets#GDP #growth #coronavirus #recession #economy #economics #US


12.50pm: US indices expected to open higher

The FTSE 100 was close to its high for the day ahead of what is expected to be a firm opening in the US.

Londons index of heavyweight shares was up 68 points (1.1%) at 6,212.

US indices are expected to join in with the general advance on global stock markets. Spread betting quotes suggest the Dow Jones average will open at around 25,744, up almost 200 points, while the S&P 500 is looking like it will put on about 10 points to open at 3,046.

11.55am: UK economic sentiment falls

The European Commissions Economic Sentiment Indicator (ESI) for the UK fell to 61.7 in May, from 62.4 in April; 100 represents the 1990-to-2019 average.

“The further fall in the ESI in May likely isnt a reliable sign that GDP [gross domestic product] has continued to fall on a month-to-month basis,” cautioned Pantheon Macroeconomiscs Samuel Tombs.

“Fieldwork for all four sub-sector surveys used to calculate the overall ESI occurred in the first half of May, largely before the government recommended on May 13 that employees who could not work from home should return to their usual workplaces. A variety of unconventional daily indicators, from motor vehicle journeys to energy consumption, all point to a recovery in activity that built momentum during May. At this stage, then, were still penciling-in a 3% month-to-month rise in GDP in May, reversing some of Aprils likely 20% or so decline,” Tombs said.

“Meanwhile, the ESIs survey contains further signs that CPI [consumer prices index] inflation is on course to fall to a near-zero rate by the summer. Retailers have amassed so much excess stock during the lockdown that they now plan to slash prices to shift it,” Tombs said.

“The net balance of non-food retailers intending to increase prices rose to -15 in May, from -28 in April, but remained well below its +31 average in the 2010s. It points to core goods inflation declining to about -2.0% by July, from 0.5% in April, which would subtract 0.8pp from the headline rate. Services firms also look set to cut prices, when they reopen for business; the net balance planning to raise prices increased to -34, from -38, but also remained greatly below its +6 average of the last decade,” he added.

The FTSE 100 was up 41 points (0.7%) at 6,185, with holding company Melrose Industries PLC (LON:MRS) – best known as the owner of automotive and aerospace engineer GKN – leading the way with a 6.0% rise to 125.8p.

11.10am: Asia-focused lenders not invited to the party

The FTSE 100 index remained positive late morning as investors continued to shrug off mounting tension in Hong Kong to focus on things slowly getting back to normal – albeit with mass redundancies – in the West.

The UK blue-chip index was up 30 points (0.5%) at 6,174, and wouldve been higher still but for losses for Asia-focused lenders Standard Chartered PLC (LON:STAN) and HSBC Holdings PLC (LON:HSBA), which are under selling pressure as a result of the clashes between the Chinese authorities and Hong Kong protestors.

WATCH: Morning Report: FTSE 100 rises on Europes coronavirus bailout and US reopening plans

Standard Chartered was down 4.4% at 393.4p and HSBC was off 4.1% at 380.3, the latter after announcing the launch of five separate offers to purchase for cash previously issued loan notes.

“A recovery in bank stocks in London continues although HSBC and Standard Chartered have been left out of the move this morning, thanks to the continuing crackdown in Hong Kong. It is not so long ago that these two were meant to be the future, powering ahead in key growth regions while UK-focussed names lag behind but political upheaval in Hong Kong and the US-China situation continue to act as a drag on share prices, with no sign that either of these situations will change in the near-term,” observed Chris Beauchamp, the chief market analyst at IG.

Fast indicators

The Office for National Statistics (ONS) has published its latest set of faster indicators, covering the UKs society and economy.

According to the data, online job vacancies declined more than 50% from the start of March to the start of May 2020, with the categories of catering and hospitality, and wholesale and retail, both seeing very large declines in job adverts across this period, albeit stabilising in May between 20% and 25% of their 2019 averages.

In contrast, education saw a far smaller decline to around 80% of its 2019 average. The volume of job vacancies in health and social care saw little or no change from March to May, the ONS said.

The ONS also published the initial results from Wave 5 of the Business Impact of Coronavirus (COVID-19) Survey (BICS) of UK businesses for the period May 4 to May 17, 2020.

According to the survey, 79% of businesses had applied for the Coronavirus Job Retention Scheme, while 42% of businesses had less than six months of cash reserves.

24% of businesses who have currently paused trading expect to start trading again in the next four weeks, compared to 31% who expect to start trading in more than four weeks time; 46% are not sure when they will restart trading.

Of the 14% of businesses who reported they had paused trading but are intending to restart trading in the next two weeks, 31% of their workforce will return from furlough leave, the ONS reported.

24% of businesses who have currently paused trading expect to start trading again in the next 4 weeks, compared to 31% who expect to start trading in more than 4 weeks time.

46% are not sure when they will start trading again

— Office for National Statistics (ONS) (@ONS) May 28, 2020

9.50am: easyJet flying high after on flights resumption news

The Footsie briefly topped 6,200 this morning and remained firmly in positive territory on renewed optimism about an end to coronavirus pandemic ockdowns.

Londons index of leading shares was up 40 points (0.7%) at 6,184, with asset manager M&G PLC (LON:MNG), up 9.4% at 149.35p, leading the advance, after its business update yesterday.

easyJet PLC (LON:EZJ), up 5.2% at 745.4p, was in the silver medal position as the low-cost airline confirmed it would resume flights from June 15.

“Its encouraging to see the airlines start giving firm dates for getting planes back into the sky. All signs are pointing to a long road to recovery though. Unfortunately, this means easyJet is joining many of its competitors in making a large number of its staff redundant as it buckles up for several years of reduced demand,” observed William Ryder, an equity analyst at Hargreaves Lansdown.

“One possible silver lining for shareholders is that the crisis provides airlines with a chance to reset their costs structures. Airlines can renegotiate with airports and other suppliers, as well as reducing headcount and agreeing reductions in staff pay. That would make the surviving airlines leaner and more efficient than they were previously, even if social distancing measures prevent them from exploiting this in the near term,” he added.

We're restarting some flights from 15 June 2020. We have put a number of biosecurity measures in place to protect you, our aircrew and our ground crew. Watch the video to find out more.

— easyJet (@easyJet) May 26, 2020

8.40am: Third session of gains

The FTSE 100 index made a positive start to proceedings on Thursday as it nudged into territory last seen in February.

The index of UK blue-chips advanced 44 points to 6,187.82.

While the gains werent of the quantum seen in recent days, it appears the UK price-setters continue to be buoyed by efforts globally and nationally to ease lockdown restrictions.

However, perhaps the froth will be knocked off the market when US traders emerge from their slumbers to react to the latest weekly jobs data this afternoon.

The devil, of course, will be in the detail with investment experts such as James Mee, who heads the Waverton Multi-Asset Income Fund, eyeing the number of Americans that are temporarily unemployed versus those who are long-term out of work. As the millions in the latter category creep up, so do the worry levels, says Mee.

On the market, Rolls Royce (LON:RR.), which has announced a series of cost savings measures to right-size the business following the coronavirus pandemic, was the Footsies top faller, tumbling 6.5%.

Making an interesting contrast and suggesting some sort of long/short strategy at play in the aero-engineering sector was the 4.2% rise in GKN-owner Melrose Industries (LON:MLRO).

Also in demand early on were shares in the investment group M&G (LON:MNG), which was lauded on Wednesday for making a dividend payment in the face of some pretty horrendous market turmoil and when others were cancelling the payout. The stock advanced 5%.

Hyve Group (LON:HYVE) topped the FTSE 250 with around a 500% gain. Unfortunately for investors this was purely technical following the consolidation of its shares.

Cineworld (LON:CINE) was the mid-cap indexs real main gainer, up 20% as coronavirus lockdown restrictions look set to be eased further in the UK.

Proactive news headlines:

Bidstack Group PLC (LON:BIDS) told investors it is pleased with its progress and noted that the fledgling In-game advertising industry is seeing a spike in demand amidst the coronavirus (COVID-19) pandemic. The company, which hosts its AGM later on Thursday, has seen notable momentum in recent weeks with new agreements entered into for key partnerships and it is now working with most of the major ad firms. James Draper, Bidstack chief executive said in a statement: “The disruption to the advertising industry arising from the global cancellation of live sports as a result of COVID-19 has resulted in media buyers following audience demand and seeking to get in front of the increasing numbers of consumers turning to video gaming as an alternative.

Galantas Gold Corp (LON:GAL) has told investors that concentrate processing has now restarted at its wholly-owned gold mine near Omagh, Northern Ireland. During the downtime, maintenance of certain aspects of the processing plant was undertaken which is expected to minimise any future disruptions, the company noted. Staff previously furloughed under the UK government grant scheme are now back at work, it added. Corporate activities also continue, the company noted. “Discussions with a number of parties continue in terms of a corporate action involving a potential sale or joint venture and due diligence materials continue to be processed,” Galantas said in a statement.

Oncimmune Holdings PLC (LON:ONC) said it has signed its largest contract to date with Swiss pharma giant Roche to profile auto-antibodies in patient samples collected during cancer immunotherapy trials. The new contract follows an initial project between the companies over the past two months and will enable further assessment of individual patient responses to immunotherapy through immune profiling. The contract involves a substantial upfront payment, added the AIM-listed group and starts immediately. Initial results are scheduled to be provided to Roche within three months and the project to be completed by November.

Filta Group Holdings (LON:FLTA) said it believes revenues and margins will return to levels seen in the first quarter once social distancing restrictions are lifted and the restaurant and hospitality industries return to normality. “Albeit that there has to be some uncertainty as to how long, and to what extent the restrictions may persist, we believe that, by the actions we have taken, we will be able to manage the group through that period and to be in a strong position thereafter,” said Filta's chairman Tim Worlledge. His comments accompanied full-year 2019 results from the oil filtration and fryer management group. Revenues for the 12 months ended December 31, 2019, were up 75% to £24.9mln, reflecting an £8.6mln contribution from the 2018 acquisition, Watbio.

AFC Energy PLC (LON:AFC) has said its HydroX-Cell(S) fuel cell system remains on target for initial release in 2022 following successful development works this year. The hydrogen power generation specialist said designs have been engineered for the first full commercial scale prototype system, which will commence manufacture in June and build on positive results achieved both at laboratory scale and single-cell commercial-scale testing. AFC also said that its internal capacity to produce HydroX-Cell(S) electrodes has increased and a pilot fabrication process for the production of membrane electrode assemblies (MEA) is under development.

Blue Star Capital PLC (LON:BLU) said its investee company, SatoshiPay, has received support in the form of a strategic investment from its key partner, the Stellar Development Foundation (SDF). SDF has invested US$500,000 by way of a convertible loan note to support SatoshiPay in the development of its B2B solution for commercial, cross-border payments and digital wallets using the blockchain framework. The company said the funds will be used primarily to develop and market the SatoshiPay B2B solution which is currently being tested with a product expected to enter closed alpha testing within 8 weeks and a public beta launch expected in the fourth quarter of 2020.

e-therapeutics PLC (LON:ETX) has said it is moving into the field of RNA interference, also known as gene silencing. The approach won inventors Andrew Fire and Craig Mello a Nobel Prize in 2006. Since then researchers have struggled with RNAi discoveries, partly because of problems getting the molecules to their target. e-therapeutics believes its computational approach to drug discovery could aid the search for new RNAi drug candidates. Its machine learning-enhanced database of over 15mln small molecule compounds will allow scientists to perform functional in-silico (computer-based) phenotypic screens. In the same announcement, the company also said it has appointed Dr Paul Burke, head of Burke Bioventures, as chair of its scientific advisory board (SAB).

Kodal Minerals PLC (LON:KOD) told investors that its feasibility study for the Bougouni lithium project, in Mali, has been accepted by the countrys Ministry of Mines and Petroleum. The ministry confirmed that no further technical and financial meetings are required prior to mining licence approval. Additionally, the Directorate Nationale de la Géologie et des Mines has now agreed the mining area and new permit boundary to encompass all resources along with the proposed mining and associated infrastructure areas. Kodal also noted that its gold assets in Mali and Cote d'Ivoire have attracted interest from investors and other exploration and development companies.

Primary Health Properties PLC (LON:PHP), one of the UK's leading investors in modern primary healthcare facilities, said it has contracted to provide development funding for the construction and acquisition of a purpose-built primary care centre in Arklow, Co. Wicklow, Ireland for an anticipated total cost of €18.0mln. In a statement, the FTSE 250-listed firm said agreements for a lease with an initial term of 30 years have been signed with the Health Service Executive and a local GP practice, which will relocate to the centre on practical completion. The building, which will comprise an area of 5,333 square metres, is to be constructed to the new Nearly Zero-Energy Buildings regulations in Ireland.

Power Metal Resources PLC (LON:POW) has extended its option to acquire an additional 10% of the Haneti polymetallic project in Tanzania until the end of August. The company said that it and partner Katoro Gold PLC (LON:KAT) are still evaluating approaches to take a stake or farm-into the project. Power Metal has a 25% stake in Haneti but can increase this to 35% through the payment of a further £25,000 to Katoro.

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