- FTSE 100 index gains 48 points
- Hastings Group recommends £1.66bn takeover offer
- Moderna, JNJ update on coronavirus vaccine supply deals
3.45pm: Hastings Group to go private
FTSE 100 was little moved before close, rising 48 points to 6,084 while sterling was up 0.5% to US$1.3145.
Hastings Group Holdings PLC (LON:HSTG) surged 17% to 252.4p after recommending a takeover offer for £1.66bn in cash to its shareholders.
A consortium of Finnish insurer Sampo Oyj and South Africa's Rand Merchant Investment, which already owns a 29.7% stake in the company, offered 250p per share in cash, a 16% premium above Tuesdays close price and 47% above the price on 28 July before talks were revealed.
Investors will also be entitled to a 4.5p interim dividend declared by the FTSE 250-listed insurer as it reported a first-half profit before tax of £63.5mln, up 37% on a year ago.
Analysts at UBS said they believe Hastings "would be better suited to this proposed ownership structure" as the outlook for UK motor insurers is challenging.
"For Hastings to execute on its long term market share growth ambitions, we likely need a period of hard UK motor pricing where customer churn increases. We find that unlikely near term. Should the UK motor pricing cycle remain depressed, we see logic in Hastings finding 'parental support' in a larger balance sheet.
2.50pm: Dow Jones opens 200 points higher
FTSE 100 pared gains, adding 52 points to 6,088 as Wall Street was pushed in the green by news on coronavirus vaccines.
The Dow Jones jumped 200 points to 27,029 at open, with the S&P500 rising 12 points to 3,319.
Johnson & Johnson (NYSE:JNJ) rose 1% to US$148.13 after securing a US$1bn deal with the US to develop and deliver 100mln doses of its coronavirus vaccine, with late-stage trials set to begin in September.
Meanwhile, Moderna Inc (NASDAQ:MRNA) also announced it has received US$400mln in deposits for potential supply of its COVID-19 vaccine but it slipped 3% to US$76.37.
The biotech is in talks with several countries to set agreements and is on track to enrol all 30,000 participants of the final stage of clinical trials by September.
Doses are priced between US$32-37 each, CNBC reported.
1.50pm: ADP private payrolls miss Wall Street forecasts
FTSE 100 was still lingering after lunch, up 63 points to 6,099.
Wall Street is expected to open higher despite US private payrolls rising by 167,000 in July, well away from the 1mln forecast and below Junes 4.3mln.
Wow! #ADP employment change +167K in July against 1.2 million expected. Looks like US labor market really is stalling. pic.twitter.com/1v84j9lIW0
— jeroen blokland (@jsblokland) August 5, 2020
According to Andrew Hunter, economist at Capital Economics, it is further proof that employment growth has slowed sharply amidst the renewed wave of coronavirus infections.
“The details suggest the slowdown was driven by the leisure and hospitality sector which, after adding close to 2mln jobs in June, added just 38,000 in July, which would make sense given the renewed restrictions on bars and restaurants in many states. But most other sectors also saw a sharp slowdown,” he commented.
But his expectation for Fridays data is a 1mln increase in non-farm payrolls: “ADP has never been a great guide to the official payrolls figures and has actually been particularly poor in recent months, with the ADPs initially published estimates for May and June (which have since been miraculously revised up to better match the official data) proving far too pessimistic.”
12.30pm: Legal & General dips after keeping dividend flat
FTSE 100 held its gains at lunchtime, advancing 61 points to 6,097.
Legal & General Group PLC (LON:LGEN) was among the top blue-chip fallers, shedding 2% to 215.4p after keeping the dividend flat in light of dented interim profits.
The life insurers reported profit before tax plunged 73% to £285mln, mainly hit by the impact on the discount rate used to calculate insurance reserves.
L&G, which aims to be “a leader in the post-pandemic economic recovery” by supporting shareholders and customers and delivering “inclusive capitalism” through its investments, maintained the interim dividend at 4.93p, less than the forecast 5.23p.
Earlier this year, a shareholders group warned that L&G should not pay a dividend because of the substantial bond market losses and coronavirus uncertainty it was facing.
Analysts at broker Shore Capital believe the distribution choice “is sensible as Legals previous policy of circa 7% per year dividend increases was unsustainable in the current climate”.
“The dividend itself is supported by earnings, cash and underlying capital generation, but the dividend growth was not. On the current dividend of 17.57p Legals is yielding 8.0%.”
11.40am: 1,500 jobs at risk under WH Smiths new plan
FTSE 100 held its gains in late morning, rising by 63 points to 6,099.
In the FTSE 250, WH Smith PLC (LON:SMWH) added 2% to 1,005.31p after announcing a new plan that could see up to 1,500 jobs culled.
The newsagents chain has seen a slow recovery since reopening, with 246 of the largest outlets in stations and airports now trading but passenger numbers remain low.
Since June, 575 stores in the High Street arm have rolled up their shutters, though footfall in Britains town and city centres remains down significantly on last year.
Consultation is now beginning on the proposed restructuring and redundancies, which is expected to cost £15-19mln.
10.35am: Virgin Atlantic files for bankruptcy protection in New York
FTSE 100 surged again in mid-morning, adding 65 points to 6,101.
Troubled airline Virgin Atlantic filed for bankruptcy protection in New York late on Tuesday, though the filing said it had negotiated a deal with stakeholders to clear out debt.
The carrier, owned by Delta Airlines and Virgin Group with 49% and 51% stakes respectively, also warned Londons High Court it could run out of cash if creditors dont agree to a £1.2bn rescue deal.
Cashflow could drop to “critical levels” by mid-September and the firm will “run out of money altogether” by the week beginning September 28, The Times reported.
Last month the carrier reportedly received backing from key financial stakeholders to secure a £1.2bn rescue deal.
It included £200mln from Richard Bransons Virgin Group, while hedge fund Davidson Kempner will lend £170mln.
Another £400mln would come from deferrals of fees agreed with Delta Airlines and Virgin Group, while cost-saving measures would generate a further £200mln.
9.40am: UK services PMI jumps to positive territory
FTSE 100 trimmed its gains despite the easing of lockdown boosting the UK service sector's PMI reading for July.
Londons blue-chip index was up 36 points to 6,072, while sterling was flat at US$1.3082.
The latest UK services PMI reading came in at 56.5, up sharply from 47.1 in June, and the fastest rate of growth seen in the last five years as businesses reopened across the country.
New orders also rebounded during the latest survey period, reflecting an improvement in corporate and household spending.
The index has risen in each month after reaching a survey-record low of 13.4 in April, but the latest reading was the first to exceed the neutral 50.0 threshold since the pandemic began.
“UK service providers are starting to see light at the end of the tunnel after a record slump in business activity during the second quarter of 2020,” said Tim Moore, economics director at IHS Markit, which compiles the survey.
“However, these are still the very early stages of recovery and survey respondents often commented on achieving growth from an exceptionally low base,” he continued.
"While the latest survey data provide a number of positive signs that the UK economy is back in expansion mode, the weakness of the employment figures reported in July is clearly a cause for concern and likely to hold back the longer-term recovery in business and consumer spending."
8.50am: Brighter start than forecast
The FTSE 100 got off to a better than expected start on Wednesday amid hopes the US will extend its stimulus package and ahead of UK service sector PMI data.
The index of UK blue-chips opened its account 56 points higher at 6,088.52.
However, the underlying picture, as told by the gold price, was still a nervy one. Remember, the yellow metal is a haven in times of turmoil, so its push into uncharted territory above US$2,000 an ounce suggests investors are at least hedging their bets.
No prizes for guessing that diggers Polymetal (LON:POLY) and Fresnillo (LON:FRES) would be near the top of the Footsie with gains of 4.4% and 3.2% respectively.
Topping the charts was British Airways owner IAG (LON:IAG), up almost 5%, as its bounce from recent lows, precipitated by rights issue plans, continued. Encouraging sector news was provided in the form of easyJets (LON:EZJ) marginally better than expected trading update on Tuesday.
An upgrade to buy from the influential media team at Deutsche Bank provided a 3.3% boost to broadcaster ITV (LON:ITV), which has its interim results on Thursday.
Continuing to feel the fall-out from worse than expected full-year results, which included a £1.3bn write-down of the value of its drinks brands, Diageo (LON:DGE) led the Footsie fallers with a 2.3% decline.
Among the mid-caps Hastings Direct (LON:HSTG) stood out with a 17.5% rise after it said had agreed to be taken private for £1.66bn.
Proactive news headlines
Braveheart Investment Group PLC (LON:BRH) has said that its investee company Paraytec is making progress with the development of a coronavirus (COVID-19) test in conjunction with the University of Sheffield. The construction of a viral mimic of the same size as COVID-19 has been completed, said Braveheart, as has work on a CAPTURE module, a specialised surface coated with a macromolecule to which binds the virus very tightly. This virus-binding molecule is a COVID-19 DNA aptamer that has been supplied to Paraytec. The next stage is the construction of Signal Generation components said Braveheart, which will accelerate the speed a test result comes back.
IronRidge Resources Ltd (LON:IRR) soared higher on Wednesday as the group described as exceptional the latest gold exploration results from the Zaranou project in Côte d'Ivoire, West Africa, with some grades as high as 1,075 grams per tonne (g/t). The set of results, from the Ebilassokro and Ehuasso targets, are the latest in a series of strong drill results and contain the highest grades to date. “Exceptional” results include 5 metres in the Ebilassokro measuring 270.5 g/t gold, with 1 metre (m) at 1,075 g/t, while another hole saw 24m at 13.6 g/t including 4m with 76.2 g/t at the Ehuasso target. Other holes encountered further high grade and visible gold.
Gfinity PLC (LON:GFIN) said it has partnered with Abu Dhabi Motorsport Management (ADMM) to launch a new digital motorsport competition, the V10 R-League. The V10 R-League has been launched as part of the global racing series and is the first stage of a five-year agreement between Gfinity and ADMM which will feature a range of internationally focused virtual motorsport leagues and competitions, designed to provide commercial opportunities with brands, broadcasters and teams. V10 will run two seasons per year and involve eight teams competing for a £100,000 prize each season.
Iconic Labs PLC (LSE:ICON) rose on Wednesday as the firm announced that in the course of providing its services through the management services agreement with JOE Media, it has secured a new contract for JOE Media, for the production and distribution of bespoke social content. The multidivisional new media and technology company said that revenues from this new contract are in excess of £150,000 and it is scheduled to commence in the third quarter and conclude in the fourth quarter of this year.
OptiBiotix Health PLC (LON:OPTI) said it has extended the terms of its original exclusive licence agreement for OptiBiome with OptiPharm Pty Ltd, as announced on March 31, 2020, to now include Europe. The life sciences business, which is developing compounds to tackle obesity, high cholesterol, diabetes and skincare, said the terms of the exclusive licence agreement originally granted OptiPharm exclusive use of the OptiBiome trademark in Australia, parts of Asia, New Zealand, Middle East, Gulf States and North America. The company added that market exclusivity remains linked to minimum order quantities.
Eden Research PLC (LON:EDEN) said its commercial partner Eastman Chemical Company has received authorisation to sell the sustainable biopesticides specialist's Cedroz product in Greece, marking the entry into the first of its key EU markets. The country is important for the commercialisation of the terpene-based nematicide, with fruit and vegetable crops accounting for 18.8% of total agriculture production, Eden said. Sign-off includes the use of Cedroz on tomatoes, strawberries, aubergine, peppers, okra, cucumber, zucchini, pumpkin, melon and watermelon both indoors and outdoors.
Oncimmune Holdings PLC (LON:ONC) said two scientific abstracts based on evidence gleaned from a large-scale trial provided further supportive evidence for the use of its EarlyCDT Lung blood test in screening for cancer. The first abstract assessed the cost-effectiveness of using the immunodiagnostic companys breakthrough to triage patients into CT scanning. The conclusion was that the Oncimmune screen method was indeed value for money “excluding the additional costs of lung cancer treatment and enhanced survival from earlier detection”.
Gaming Realms PLC (LON:GMR) announced that it has entered into a three-year licensing and distribution agreement with Oryx Gaming, a unit of Bragg Gaming Group Inc. (OTCMKTS:BKDCF) (TSX:BRAG) and leading content aggregation, player engagement and data services platform for gaming operators globally. Under the terms of the agreement, the developer and licensor of mobile-focused gaming content said Oryx will have access to Gaming Realms' entire Slingo Originals portfolio, meaning the ever-growing and popular Slingo games including Slingo Rainbow Riches, Slingo Centurion and Monopoly Slingo will be distributed via the Oryx Hub platform. As part of the agreement, Oryx will also be able to license the Slingo content to over 100 operators worldwide, through existing partnerships.
FastForward Innovations Ltd (LON:FFWD) said its investee company, Leap Gaming, has been granted a game supply licence by the Malta Gaming Authority (MGA). Leap, in which FastForward owns a 43.4% stake, said the licence is seen “globally as a vote of confidence”, with the MGA being “one of the most respected licencing authorities globally”.
ECSC Group PLC (LON:ECSC) has said it made an adjusted EBITDA profit for the first six months of 2020 following a jump in managed services recurring revenue. In a trading update for the six months ended June 30, 2020, the cybersecurity group reported the turnaround from a £184,000 loss in the prior year, while its recurring revenue figure rose by 25% to £1.17mln. The companys managed services order book also rose to £2.9mln from £2.7mln, while consulting revenues increased by 4% to £1.24mln.
Adamas Finance Asia Limited (LON:ADAM), the pan-Asian diversified SME investor, said investee company Future Metal Holdings dolomite quarry in China is expected to operate at full production for the remainder of 2020. Future Metal Holdings (FMHL) is a natural resources company majority-owned by Adamas and which operates an open-pit dolomite quarry in Shanxi Province, China. In early 2020, quarry operations paused temporarily due to the coronavirus (COVID-19) pandemic, Adamas said, but resumed in mid-March as China gradually recovered from the crisis.
AfriTin Mining Ltd (LON:ATM) told investors that monthly tin production at the Uis mine, in Namibia, rose to 35 tonnes, up 79% month-on-month. Production for the year to date totalled 112 tonnes after the month of July, it added. The group highlighted that it is targeting output of 60 tonnes per month, which would result from the processing of some 45,000 tonnes of ore per month (at a rate of 80 tonnes per hour).
Argo Blockchain PLC (LON:ARB) has reported a higher average monthly mining margin from its cryptocurrency operation in July. In an operational update for the month, the AIM-listed firm reported a margin of 34%, up from 27% in June, adding that at the end of the period it held 76 Bitcoin and Bitcoin equivalents (BTC) in accordance with its asset management strategy. Argo also reported that during the month it had mined 165 Bitcoin and BTC compared to 180 in June, taking the total mined in the year-to-date to 1,834 BTC.
Sunrise Resources PLC (LON:SRES) told investors that the Nevada authorities have now issued the notice of a final decision to grant the required mine reclamation permit for the group's CS Project. The Nevada Bureau of Mining Regulation and Reclamations (BMRR) final decision approves the company's proposed mine reclamation plan. It is subject to a 10-day appeal period and will become effective on August 15. Sunrise Resources also announced that, following the appointment of Peterhouse Capital as broker to the company on 4 November 2019, Beaumont Cornish ceases to act as its joint broker with effect from today although it remains the company's nominated adviser.
Mosman Oil And Gas Ltd (LON:MSMN) has told investors that the Champion projects Falcon-1 site preparation is now complete and drilling is due to start shortly. Contracts are now being finalised and a rig is available with drilling operations expected to take a few weeks. Elsewhere, at the Greater Stanley project, the operator has now submitted all paperwork to the Texas Railroad Commission and this workover is expected to commence shortly.
Europa Metals Ltd (LON:EUZ) has shuffled its board with Laurence Read now chief executive and Myles Campion moving up to executive chairman from technical director. Previous chairman Colin Bird has stepped down with immediate effect. Europa is developing the Toral zinc-lead project in Spain and said that given the progress made over the past 18 months it is commissioning an independent JORC-compliant resource survey. Addison Mining Services will carry out the work and update the previous estimate to include the results of the 2019 drilling programme.
Redx Pharma (LON:REDX), the drug discovery and development company focused on cancer and fibrosis, has announced that, following the successful completion of the loan note fundraising and receipt of funds, Thomas (Tom) Burt has been appointed as a non-executive director of the company with effect from August 4, 2020. It noted that Burt brings extensive investment experience in the sector to his role at Redx and will represent Sofinnova on the board of directors under the terms of the subscription for shares by Sofinnova Crossover 1 SLP. He has been a partner in the Crossover fund at Sofinnova Partners since its inception in 2017, prior to this, he was a research analyst covering UK healthcare and life science equities at Peel Hunt, joining in 2015 after six years as an Investment Director at specialist life science investors, Ares Life Sciences and Novo Holdings. Iain Ross, Redxs chairman commented: "I am looking forward to working with Tom and to ensuring that we grow Redx into a substantive biotech company." Burt added: "I am pleased to be joining the board as a non-executive director and helping the Company drive forward its next phase of growth."
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