- FTSE 100 closes up over 75 points
- July 4 set to see further easing of lockdown restrictions
- US PMIs getting worse but less swiftly
5.05pm: FTSE closes ahead
FTSE 100 index closed higher as traders welcomed the easing of lockdown restrictions in the UK and news that trade relations between the US and China had not collapsed.
Britain's top share index closed up 75.5 points, or 1.21%, at 6,320.
FTSE 250 also gained ground, up over 86 points, or 0.49%, at 17,660.
Restrictions due to the pandemic, as was expected, will be eased on July 4 this year in the UK and the changes will allow businesses like pubs, restaurants, and cinemas to reopen.
"Stocks were already up on the session in advance of the lockdown announcement," noted David Madden, analyst at CMC Markets.
"President Trump had to clarify that US-China trade relations were intact after Peter Navarro, one of his trade advisors, said otherwise. The confirmation that trading relations were good acted as a boost to sentiment, and it helped distract traders from the health crisis," added the analyst.
The Dow Jones Industrial Average added over 237 points at 26,261, while the S&P 500 gained over 31 points at 3,148.
4pm FTSE 100 still higher
Although it is flagging in the final hour, it has been a good day for the Footsie, which has been buoyed by some decent macroeconomic data.
Londons index of leading shares was up 59 points (1.0%) at 6,304 and although traders long on equities cannot as yet pop down the pub to celebrate the markets continued revival, that day is apparently not far off (in England, at least).
As widely expected. the government set out further changes to lockdown measures in England.
From Saturday, July 4, pubs, restaurants and hairdressers will be able to reopen, providing they adhere to coronavirus safety guidelines.
Where it is not possible to stay two metres apart, guidance will allow people to keep a social distance of one metre plus, the government said. “This means staying one metre apart, plus mitigations which reduce the risk of transmission,” the governments press statement said.
“The long and nervous wait for hoteliers, landlords and restaurateurs is now nearing an end. It will also be a joy that our cultural centres can slowly return to life,” suggested Dame Carolyn Fairbairn, the director-general of the bosses pressure group, the CBI.
“Easing social distancing rules will make a material difference to the viability of thousands of firms. The move will also have a significant impact across sectors employing millions of people.
“As hospitality and cultural sectors prepare to re-open, the safety of their staff and customers must come first to maintain confidence. Firms will be keen to closely examine the guidance that will be critical for success,” she suggested.
In the US, the Manufacturing Purchasing Managers Index (PMI) for June recovered to 49.6 from 39.8 in May but was still below the 50.0 level that signifies the crossover point between contraction and expansion in activity.
The Services PMI improved to 46.7 from 37.5 in May while the Composite PMI rose to 46.9 from 37.
“The PMI data in the US is showing signs of improvement, but with both services and manufacturing coming in below 50 we must not forget that things are still getting worse – albeit at a slower rate than before. Manufacturing is likely to bounce back fastest – while factories may be operating under capacity due to newly imposed social distancing measures, having staff back in the building at all is a huge step forward.,” said Robert Alster from Close Brothers Asset Management.
“The recovery of the service sector relies on consumer confidence improving, and with some US states reporting a resurgence of Coronavirus cases, the resumption of normal behaviour is still a while off. Even with shops and restaurants reopening, consumers are self-regulating to stay safe. Across the world, governments and businesses alike are grappling with the same question; how to get people spending, and fast. With the Presidential election looming on the horizon, this question is more urgent for Trump than most of his global peers,” he added.
2.45pm: NASDAQ Composite hits new intra-day high
As expected, US indices opened on the front foot with the tech-heavy NASDAQ Composite hitting a new all-time intra-day high.
The NASDAQ rose 91 points (0.9%) to 10,148 while the S&P 500 climbed 30 points (1.0%) to 3,148. The old warhorse, the Dow, was up 266 points (1.0%) at 26,291.
In London, the Footsies advance has started to run out of steam but the index is still 73 points (1.2%) higher at 6,316.
2.00pm: US indices tipped to open firmer
US stocks are expected to move higher at the old hurry-up after White House trade adviser, Peter Navarro, “clarified” his statement on the US-China pact.
Navarro had suggested in a TV interview that the trade agreement signed in January with China was the proverbial dead parrot but he later claimed his comments had been taken out of context and that the phase-one agreement remained in place.
That was a relief to investors and they showed their appreciation by chasing the Dow Jones quote up 350 points on spread betting sites to around 26,374; the S&P 500 was trading around 36 points higher at 3,154.
In London, the Footsie continues to sidle stealthily towards a triple-digit gain; the index was up 81 points (1.3%) at 6,326.
“It took a bit longer for it to get revved up, but the FTSE joined in with the Eurozones big gains following a stellar set of flash PMIs.
“Both readings were substantially ahead of estimates. The services figure came in at 47.0, compared to the 39.1 forecast and the lowly 29.0 seen in May. The manufacturing PMI, meanwhile, went one better, returning to growth – just – with a 50.1 reading, well beyond the 45.2 estimated and the 40.7 seen last month,” summarised Connor Campbell at Spreadex.
Hikma Pharmaceuticals PLC (LON:HIK), down 6.8% at 2,311p, was (un)socially isolating from many of its Footsie brethren as the shares took a tumble following a share placing at 2,300p that raised around £625mln.
Noon: Sterling's rally fades
Sterling has given up its early gains against the dollar, bolstering the Footsie in the process.
Londons index of leading shares was up 71 points (1.1%) at 6,316, with asset management companies to the fore after St Jamess Place PLC (LON:STJ) revealed it had net inflows of around £670mln in May.
St Jamess Places funds under management at the end of May stood at £112.6bn, up from £105.8bn the year before.
Sector peers M&G PLC (LON:MNG) and Standard Life Aberdeen PLC (LON:SL.) are up by around 4.8% while insurer Prudential PLC (LON:PRU), which has a bob or two in asset funds, was up 3.7% at 1,229p.
Marketing and advertising agency WPP PLC (LON:WPP) was wanted after this mornings UK manufacturing and services activity data suggested a return to something approaching normal levels. The shares were up 3.4% at 660.8p.
Eurozone & UK economies are still in recession, but new PMI sentiment data for June point to a rebound in progress. While the contraction has shifted from deep to moderate, the question is whether the bounce will soon lead to growth vs. a softer-but-linger contraction: pic.twitter.com/o1QHVFH2nS
— James Picerno (@jpicerno) June 23, 2020
10.45am: Footsie above 6,300
If the stock markets response to this mornings purchasing managers indices was underwhelming, it could be because the improvement mask a “much slower” recovery.
Thats the viewpoint of James Smith, the economist covering developed markets at ING.
“At face value, the latest UK PMIs, like those in Europe, appear modestly encouraging. At 47.6, the composite PMI is much more 'normal' than the readings in May (30) and April (13.8). This may help rekindle the idea of a V-shaped recovery, although in reality, this is probably not what the data is telling us,” Smith maintained.
“Of course, its worth remembering that the index is still below the 50 level, which in normal times would indicate that output is falling, albeit at a much slower rate. The binary way in which the sentiment indices are formulated also potentially means the return to normality is being overstated.
“PMIs are constructed by asking respondents whether they are seeing conditions improve or deteriorate – and unsurprisingly in June a much greater share of firms reported things getting better: however this improvement comes off a very low (in some cases, zero) base, and it also doesnt tell us anything about the magnitude of the rebound.
“Wed, therefore, treat these figures with some caution, and in reality, we think the size of the economy is still well down on its pre-virus size. Judging by the Google Mobility data, which has thus far proven to be one of the better proxies for activity, travel to places of economic significance is still down by around 40%,” Smith revealed.
Nevertheless, after metaphorically shrugging its shoulders in the immediate aftermath of the release of the PMIs, the FTSE 100 index has kicked on to 6,320, up 75 points (1.2%).
June #UK #PMI: Markit reported 17.6 point increase in composite manufacturing & services output index (to 47.6 from 30.0 in May) was largest monthly rise since the series started in January 1998. Fuels belief #economy stepped up further in June after coming off April low in May https://t.co/Uj7kgyzDz5
— Howard Archer (@HowardArcherUK) June 23, 2020
9.50am: PMIs confirm recovery story
IHS Markits “flash” UK Composite Purchasing Managers index (PMI) for June rose to a four-month high of 47.6 from 30.0 in May.
A value below 50 indicates contraction in activity.
The flash UK Services Business Activity Index recovered to 47.0 from 29.0 in May while the UK Maufacturing Output Index oved back above the 50.0 crossover point, to 50.8 from Mays 35.0.
The Flash UK Manufacturing PMI for June was also above the 50.0 level, at 50.1, following Mays reading of 40.7.
"Junes PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4th July. June saw a record rise in the PMI for a second successive month, confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the COVID-19 pandemic was felt back in April,” said Chris Williamson, the chief business economist at IHS Markit.
"However, while confidence is rising that the economy will soon return to growth as the lockdown continues to ease, the longer term recovery prospects remain highly uncertain. Some of the recent gains in the PMI reflect short-term bounces as businesses returned to work, but demand clearly remains weak, as indicated by a further steep decline in backlogs of orders and an ongoing fall in new orders. Many COVID-19 restrictions and social distancing measures will also need to stay in place until an effective treatment or vaccine is available, curbing demand in a variety of service sectors in particular,” he added.
The FTSE 100 ebbed a tad following the release of the indices to 6,298 but was still up 53 points (0.9%) on the day.
???????? IHS Markit's Flash UK #PMI rose considerably to 47.6 in June
from 30.0 in May, to signal a vastly improved picture for the UK economy. Manufacturers saw a return to growth as services firms faced the softest downturn since February. Read more: https://t.co/MsnWgsB7yp pic.twitter.com/E4aDvnMeJq
— IHS Markit PMI
(@IHSMarkitPMI) June 23, 2020
9.20am: Trump calms nerves over Chinese trade negotiations
After investors practised a bit of equity distancing yesterday they are back in the market today browsing for bargains.
The FTSE 100 was up 60 points (1.0%) at 6,305, despite sterling rising by around a quarter of a cent against the US dollar.
“After Mondays uncertainties regarding a looming second wave of the coronavirus pandemic, the markets got some slightly less ambiguous news on Tuesday, covering both the relationship between the US and China, and the state of Europes recovery,” observed Connor Campbell at Spreadex.
“Shoring up investors confidence, Trump tweeted in the early hours of Tuesday morning that the China Trade deal is fully intact,” Campbell said.
Trump felt the need to issue the tweet after Peter Navarro, the trade adviser to President Trump, said the US-China trade deal was over, although he later resorted to the old cliché about his comments being taken out of context after Trump contradicted him.
8.50am: Footsie in confident mood ahead of the UK purchasing managers surveys
The FTSE 100 opened in confident mood with the markets seemingly inured to the bad news expected with the latest batch of economic data.
The results of the UK purchasing managers surveys are out at 9.30 am.
The manufacturing print is expected to improve to 45 from 40.7 in May, while the services number is set to rise to 39.5 from 29.0, though both are still well below the 50 mark that separates growth from contraction.
It was bounce-back day for the UKs engineers, led by GKN owner Melrose Industries (LON:MLRO), up 3.5%, anticipating that foreshadowed improvement in manufacturing.
Rolls Royce (LON:RR.) and Smiths (LON:SMIN) were not far behind with gains of 2.5% and 2.7% respectively.
The widely mooted easing of lockdown restrictions catapulted B&Q owner Kingfisher (LON:KGF) to the top of the risers list with a 3.7% gain.
On the FTSE 250, publicans Mitchells & Butlers (LON:MAB) and JD Wetherspoon (LON:JDW) greeted the prospect of a return to more normal activity with gains of 6.24% and 6.19% respectively, while Cineworld (LON:CINE) was up 5.5% early on.
The big Footsie loser was Hikma (LON:HIK) after German group Boehringer Ingelheim put up for sale a 16% stake in the UK generic drug maker worth £880mln up for sale. The shares reversed 8%.
Proactive news headlines
Clear Leisure PLC (LON:CLP) shares shot higher after it said an agreement had been reached with the Mediapolis receiver regarding the transfer of Mediapolis auction funds to the company's subsidiary.
Silence Therapeutics PLC (LON:SL.) announced it has formally filed the documentation ahead of its listing in the US as it provided an update on the progress of its drug pipeline, financial position and new hires.
Frontier IP PLC (LON:FIPP) said one of its portfolio companies was making “significant progress” developing a COVID-19 vaccine for animals. The approach pioneered by The Vaccine Group (TVG) would stop the disease jumping from one species to another and spilling over to humans.
The exclusivity period between the joint developers of the Billingham Energy waste gasification and power plant has been extended again, EQTEC PLC (LON:EQT) said.
Benchmark Holdings PLC (LON:BMK) said it has completed the sale of Improve International Limited, a provider of professional development training for vets, as part of its strategy to exit its non-core activities.
SDX Energy Plc (LON:SDX) highlighted its positivity in Egypt and Morocco following analysis of recent well results. Management estimates Sobhi will generate around US$25mln of cash flow to SDX (undiscounted, post-tax, after capex).
i3 Energy Plc (LON:I3E) has exercised its option to acquire producing assets in Canada, picking up all of the issued and outstanding common shares of Toscana Energy Income Corporation (TEIC). The acquired assets produced an average of 1,065 barrels of oil equivalent per day (hoped) net to generate C$5.5mln of field net back.
Canadian Overseas Petroleum Ltd (LON:COPL) has raised £700,000 of new capital with a share placing with three investors. The cash injection will be used to cover working capital and allow the company to focus on the OPL 226 asset in Nigeria.
AFC Energy (LON:AFC) said it continues to make good progress with the development of AlkaMem, its technology for electricity production from alkaline fuel cells.
Coinsilium Group Limited (LON:COIN) said its investee company, Factom Inc, had filed for reorganisation under Chapter 11 Subchapter V to address structural issues preventing them from raising further capital.
Custodian REIT PLC (LON:CREI) said property yield currently stand at the highest premium ever to government bonds as it reported its full-year results to March.
Live Company Group PLC (LON:LVCG) has reported lower losses following what the firm said was a “transformational” year for its business. For the year ended December 31, 2019, the media group reported a pre-tax loss of £1.8mln, lower than the £2.1mln loRead More – Source
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