- FTSE 100 index closes 113 points up
- Commodity stocks drive the index higher
- US indices up
5.05pm: FTSE 100 firmly higher
FTSE 100 index joined global equity markets to close higher on Tuesday as traders picked up on a more positive vibe from China and Europe.
The UK's premier index of shares closed up over 113 points at 7,439. The FTSE 250 gained over 279 points at 21,439.
Wall Street too was surging with the Dow Jones Industrial Average up over 475 points at 28,875. The S&P 500 gained over 52 points.
"The Dow Jones as well as the S&P 500 are higher on the session as the rebound in equities continues," noted analyst David Madden, at CMC Markets.
"The S&P 500 has now recovered all the losses that were posted on Friday, which is a positive sign. US factory orders jumped by 1.8% in December, which was a sharp rebound from the 1.2% registered in November," he added.
Top risers on Footsie were the resource giants like Evraz (LON:EVR), Glencore (LON:GLEN) and BP (LON:BP.).
Over in the US, Tesla (NASDAQ:TSLA) shares were on a tear, accelerating over 16% higher on the day, as the stock gets increasingly hot and comes after last week's quarterly results, which showed the second quarterly profit in a row.
3.50pm: FTSE happy where it is
The Footsie has completely plateaued after its early climb, resting at just above a hundred-point gain all day, currently at 7,431.
Not even a buoyant Wall Street has carried the London benchmark much higher.
The Dow Jones has now added a further hundred points of its own, now recording a gain of 449 points or 1.6% at 28,849, while the S&P 500 and Nasdaq are both up 1.4%.
Market sentiment has probably been helped by the World Health Organisation stating that “currently we are not in a pandemic”.
“Add onto that another injection of $71.5 billion into the banking system by the Peoples Bank of China, and the countrys continued attempts to halt the transmission of the coronavirus, and the Western indices were free to go on rebounding,” says Connor Campbell at Spreadex.
While the WHO was issuing calm words, Capital Economics group chief economist Neil Shearing was calculating the costs of the spread of the Wuhan virus, estimating that it will deliver a substantial hit to growth in China over the coming months and already poses “a more significant threat to the global economy and world markets than has been the case with previous epidemics”.
Capital Economics has cut its forecast for Chinas first-quarter growth from 5.5% year-on-year to around 3.0% – though unless things change markedly the lost output is expected to be made up over the rest of the year.
“But the disruption is now spreading to domestic industry, as factories that should have opened on Friday following the New Year holiday remain shut.
“Given that China is now at the heart of many global supply chains, this will have knock-on effects around the world. Economies in Asia (particularly Vietnam and Taiwan) look most vulnerable but, the bigger the disruption, the higher the chances that it affects economies further afield including commodity producers such as Chile and Australia and manufacturers such as Korea, Japan and Germany.”
2.45pm: US markets join the global rally
US stocks opened higher as bargain hunters returned to the market after the heavy losses last week when the coronavirus panic was rising.
The Dow Jones jumped 393 points (1.4%) to 28,794 while the S&P 500 surged 37 points to 2,386.
“Global indexes are positive, commodities are showing signs of life, yet the virus continues to spread at a rapid pace, as containment efforts are stepped up,” said Edward Moya of Oanda.
“Today's green on the screen started off in Asia, China is showing they mean business with their liquidity injections. The saying has always been “dont fight the Fed”, but it may now have to include the PBOC [Peoples Bank of China],” he added.
“The coronavirus has yielded its second death outside mainland China and continues to spread as the confirmed case count rises to 20,438. The news is hardly uplifting on the virus front, so todays bounce may not go much further. The worlds second largest economy is shutdown and it will be tough to see US stocks recapture record high territories until the virus peaks,” Moya predicted.
In the UK, the FTSE 100 was up 103 points (1.4%) at 7,428.
Mining stocks are doing much of the heavy lifting for the Footsie while outside the FTSE 350 another mining stock, Greatland Gold PLC (LON:GGP), has caught the eye with a 10% rise to 3.75p.
The company said it has has intersected high-grade gold mineralisation from its maiden diamond drilling programme at Derby North, a prospect within the company's wholly-owned Warrentinna project in Tasmania, Australia.
2.15pm: US stocks to open higher
US markets are expected to open sharply higher, following the global trend.
Spread-betting quotes indicate the Dow Jones will open around 386 points higher at 28,786; the S&P 500 is expected to rise almost 40 points from last nights closing value of 3,249.
In London, the FTSE 100 is once again sporting a triple-digit rise, up 109 points (1.5%) at 7,436.
12.45pm: Commodity stocks drive the Footsie higher
Sterling has made some modest headway against the US dollar on forex markets but that has not stopped the Footsie from revving higher.
Londons index of heavyweight stocks was up 96 points (1.3%) at 7,420, with just a dozen index constituents in the red. Five of those are the ultra-dull utility companies, which tend to fare badly when investors are in “risk-on” mode.
Mining stocks are to the fore among the miners as concerns over the spread of the coronavirus begin to abate; thats not to say that the virus is not still spreading but it appears to be proliferating less rapidly than it was a week or two ago.
“The market is currently assuming as a base-case that there will not be an accelerated spreading of the coronavirus outside of China. In the eyes of the market, it is currently seen as a fair assumption,” said Bjarne Schieldrop, the chief commodities analyst at the Nordic corporate bank, SEB.
For now, the market seems content that China will contain and manage the virus situation, and that the worst will soon be over with no accelerated spreading outside of China,” he added.
Among the mid-caps, legacy software giant Micro Focus International PLC (LON:MCRO) disappointed the market with its trading update, with both revenues and earnings below expectations.
“The impact of macro-economic uncertainty is one thing but potentially more worrying is the reference to customers changing their buying behaviour,” said Russ Mould, the investment director at AJ Bell.
“The market is unlikely to be impressed by an admission of inconsistent execution either, implying that to an extent Micro Focus continues to be master of its downfall.
“Its little wonder executive chairman Kevin Loosemore is stepping down. His departure is particularly significant given he helped build the company into the large global operator it is today,” Mould said.
11.10am: Coronavirus fears recede a little
All the major equity benchmarks are showing gains of more than 1% although the Footsie is slowly giving back its early gains.
Nevertheless, Londons blue-chip index remains 86 points (1.2%) higher at 7,413.
“Stock markets in Europe are building on yesterdays gains despite the deepening coronavirus situation. The health crisis is spreading as there are in excess of 20,000 confirmed cases in China. Sentiment in equities remains resilient for a second day in a row, but the markets have yet to recoup all the ground that was given up last week, so traders havent totally shaken off the health fears,” said CMCs David Madden.
Daiwa Capital Markets noted that the number of deaths attributed to the coronavirus is now up to 427 and the economic impact appears to be mounting.
“For example, Chinas Passenger Car Association today predicting a record drop in auto sales in the first two months of the year of between 25-30%. Nevertheless, following yesterdays plunge, Chinese stocks rebounded somewhat today, responding positively to extra liquidity from the PBoC, a decision to set the daily fixing for CNY stronger than 7/$, and no doubt also buying by the national team,” Daiwa said.
Oil stocks are going well today against the background of the meeting of the technical meeting of the oil producers organisation, OPEC. It is the committees job to assess demand for oil and this, in the view of Bjarne Schieldrop, the chief commodities analyst at Nordic investment bank SEB, is a tough ask in the current environment.
“The continued daily growth rate in coronavirus infections will be key to how severe the outbreak will become. Ten days ago, the daily growth rate was more than 50%, but the daily growth rate today is 18.6% versus 19.5% yesterday. A slightly slowing daily growth rate in infections and no signs of an acceleration outside of China is probably calming markets.,” he suggested.
“Wuhan is Chinas biggest inland transportation hub and today it is close to a ghost town with more than 40m people in lock-down. Chinese refineries are cutting throughput by 10% to 20%, with some located in central China cutting as much as 40%. How large the run-cuts will be through February 2020 remains to be seen, but somewhere between 10% to 20% seems like a fair bet. That means 1.4 -2.8m bl/day in lost crude oil processing and crude demand for February,” he added.
On futures markets, the price of Brent crude is trading 39 cents higher at US$54.84 a barrel.
Meanwhile, the latest survey of construction activity in the UK has b brought out the “glass-half-full” commentators.
“A big step in the right direction,” was the one-line summary of Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, in response to the Markit/CIPS construction PMI rising to 48.4 in January, from 44.4 in December, above the consensus forecast of 47.1.
“Clarity brought by the general election is enabling the construction sector to get back on its feet. Admittedly, the overall activity index currently is consistent with construction output falling at a 0.5% quarter-on-quarter pace in Q1, despite rising to its highest level since May but the increase in the new orders balance to 49.5, from 44.5, and the highest levels of optimism about the 12-month outlook for demand since April 2018, suggest that the PMI will rise further over the coming months,” Tombs said.
“Indeed, renewed momentum in the housing market triggered by lower mortgage rates and the general election result should feed through to a renewed pick-up in housebuilding soon,” Tombs added.
The latest survey does not seem to have engendered much enthusiasm for housebuilders, however; Berkeley Group Holdings PLC (LON:BKG) is one of the few blue-chips in the red (down 0.5%) while the other big names of the sector are underperforming the index.
9.55am: Pessimism in the construction sector less in evidence in January
Construction output in the UK fell again in January but did so at its slowest pace since May 2019, according to IHS Markit/CIPS.
The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index rose to 48.4 in January from 44.4 in December; a level below 50 represents a contraction in activity.
“The construction sector downturn lost intensity in January amid slower reductions in house building, commercial work and civil engineering activity,” reported Tim Moore, the economics associate director at IHH Markit, which compiles the survey.
“Measured overall, the latest dip in construction output was much shallower than in December, with survey respondents often commenting on improved willingness to spend among clients since the general election.
"Commercial work dropped at the slowest pace since the start of 2019 and was the main beneficiary of receding political uncertainty. UK construction companies also commented on signs of a turnaround in demand conditions across the residential development category during January. Civil engineering remained the weakest performing area of construction work as firms across the supply chain cited a lack of opportunities to replace completed contracts,” he added.
Duncan Brock, the group director at the Chartered Institute of Procurement & Supply, said optimism in the construction sector was at its highest level since April 2018.
"Though the overall Index still registered below the no-change neutral mark, the signs are good that the sector is building up momentum for the year ahead and recovering some losses in new work which will ease concerns that the last bout of uncertainty has inflicted irreparable damage on the sector. The housing sector, in particular, was the strongest performer, with the best result since May 2019,” Brock said.
Job losses are still in evidence overall, he cautioned, and construction firms do not yet appear to be ready to scale-up plans to increase workforces in the coming months until “a stronger economic and political recovery [is] clearly in sight”.
"So, though this rebound is a welcome sign, as with all sudden improvements, the danger remains the sector could easily recoil and shrink again. The domestic political situation and the UKs attempt to find its place in the world remains littered with obstacles so businesses could find themselves on this see-saw of good and bad news for some time yet,” Brock suggested.
The FTSE 100 was down 98 points at 7,425.
9.30am: Ton-up for the Footsie
The Footsie made like a ton-up boy after Chinese stocks stabilised this morning on the second day of trading after the long break.
Londons index of heavyweight shares was up 111 points (1.5%) at 7,437, with the ever-volatile NMC Health PLC (LON:NMC) leading the rise after yesterdays share price plunge.
The company, which has sponsored an independent review of the accounting practices that have sparked a “bear raid” on the stock, said it knew of no specific reason for yesterdays share price movement.
The independent review being undertaken by Freeh Group, announced on 17 January, is proceeding. The company said its operations continue to perform strongly and it expects to report full-year 2019 results in-line with management's expectations.
The shares were up 7.8% at 1,117p.
DCC Group PLC (LON:DCC), the Irish business services group, outperformed the index with a 2.0% rise at 6,346p after it calmed a few nerves with a reassuring trading update covering the final three months of 2019.
#coronavirus whether the #outbreak has had an impact on #DCC PLC or not is not certain but it's just issued a sell signal on our system. See chart. Key: above the cloud "In Buy" below "In Sell" #FTSE #FTSE100 #fintwit #trading #investment #stocks #Ireland pic.twitter.com/2i1MkPkQTd
— The Flying Stocksman (@flyingstocksman) February 3, 2020
8.40am: Big gains on Tuesday
London appeared to shake off the threat posed by the coronavirus to make a triple-digit start to proceedings and bounded higher in early trade on Tuesday.
The UK's blue-chip index rose 111 points to 7,437.85.
Wall Street closed firmly in the green, while Asia also nosed into positive territory overnight.
A weaker pound, which is now down below US$1.30 after Boris Johnsons tough Brexit rhetoric on Monday, made life easier for the indexs foreign currency earners.
“[BP chief executive] Bob Dudley bows out with a flourish, hiking the dividend and ensuring the company he leaves is in better shape than when he took over,” said Neil Wilson, senior analyst at Markets.com. BP shares rose 3.8%.
Building supplies giant Ferguson (LON:FERG) jumped 5% higher after it confirmed it would take a US listing of some form once it split off its UK operations.
The miners were also all well bid, with BHP (LON:BHP) leading the pack with a 3% gain.
Proactive news headlines:
Power Metal Resources PLC (LON:POW) shares jumped by 7% at the open on Tuesday, after the company revealed it has completed initial due diligence at the Alamo project in Arizona. The Alamo project shows evidence of possible epithermal mineralisation related to a deep-seated porphyry intrusion. Evidence of intrusive dykes and structural conduits also support the prospectivity of the project.
Argo Blockchain PLC (LON:ARB), the cryptocurrency miners, mined 247 bitcoins in January, generating revenues of £1.63mln. The company said mining was more efficient in January than in December despite increasing algorithmic difficulty. Argo remains ahead of schedule in its aim to bring 17,000 machines into production by the end of March, with 16,500 machines now grinding their way through calculations to produce "blocks" of verified transactions that are added to the blockchain.
Tower Resources PLC (LON:TRP) is expecting to finalise its drill schedule later this month for the NJOM-3 well, offshore Cameroon. The explorer, in a statement, told investors that Geoquip Marines survey vessel MV Investigator is presently in the anticipated NJOM-3 area conducting a site survey.
High-end holiday specialist Intosol PLC (LON:INTO) has strengthened its board with the appointment of Terry Larkan as chair of its audit committee. Larkan is a former head of Corporate Governance at Barrick Gold and a director of CIC Capital, which advises Intosol. Another non-exec will be appointed shortly, said the company, to increase the number of independent directors to four with one non-independent.
Bluejay Mining PLC (LON:JAY) has released encouraging results from the first geochemical survey undertaken at the Disko-Nuussuaq polymetallic project in Greenland. Disko is prospective for nickel, copper, cobalt, platinum group metals and gold. Mobile metal ion survey and spatiotemporal geochemical hydrocarbon soil geochemical surveys at Disko identified multiple nickel and copper geochemical anomalies, further enforcing both new and pre-existing anomalies.
Solo Oil PLC (LON:SOLO) has told investors that talks with ONE Dyas over a possible acquisition are continuing, with a view to renegotiating terms to enable the deal to proceed. In a statement, the junior oiler said that, in support of the potential acquisition, it continues to assess all debt and equity funding options available to the company. Solo also said it continues to progress a number of complementary business development opportunities, in line with its European gas strategy.