UK & US

FTSE 100 still in the red, seeking inspiration from the US

  • FTSE 100 index dives 76 points
  • Government extends mortgage repayment holiday scheme by three months
  • Utilities submerged as United Utilities hints at dividend reset

11.50am: Government extends mortgage repayment holiday scheme

The UK government has extended its mortgage payment moratorium scheme by three months.

The scheme was announced in March to help hard-pressed home-owners make ends meet during the lockdown period without having to worry about making monthly mortgage payments for a while.

The Financial Conduct Authority has published draft guidelines on the options available. The official advice is for borrowers to resume payments if they can but lenders will also be given licence to offer reduced payments, a tempory switching to an interest-only mortgage or simply extending the mortgage payment holiday.

The FTSE 100 was down 76 points (1.3%) at 5,939.

11.00am: Hong Kong unrest gives Asia-focused stocks the jitters

Londons leading shares are slowly clawing back their losses – with the emphasis on the slowly.

The FTSE 100 was down 77 points (1.3%) at 5,938, with Asia-focused financials and utilities bearing the brunt of the pain.

Insurance giant Prudential PLC (LON:PRU) and the company formerly known as Hongkong and Shanghai Banking Corporation – HSBC Holdings PLC (LON:HSBA) – were down 7.1% at 1,035p and off 5.7% at 377.82p respectively as investors get the jitters over developments in Hong Kong.

Beijing's newest decision is to set up a Secret Police Branch in Hong Kong, which is responsible in enforcing the coming National Security legislation. Random arrests, unlimited custody and torture are going to be the new HK norms. #sanctionsnow #CCPsucks pic.twitter.com/ePEXbA2Mkl

— Chu-Hoidick Eddie (@ChuHoiDick) May 22, 2020

The Chinese government is planning to cut down on civil liberties in Hong Kong and the previous form suggests the locals will not take this lying down.

In the utility sector, United Utilities Group PLC (LON:UU.) was off 3.9% at 870p after its full-year results.

READ United Utilities ups dividend despite fall in profits

“Somehow you would expect a water company to have plenty of liquidity and United Utilities does have significant cash resources to see it through the current crisis,” says Russ Mould, the investment director at AJ Bell.

“However, if investors were expecting the utilities sector to provide a copper-bottomed source of dividends there was a worrying hint in United Utilities latest results that might not be the case.

“A review of the dividend policy once there is a clearer picture of what a post-coronavirus world looks like doesnt sound like good news for United Utilities shareholders and will prompt concern that another previously reliable and growing source of income is going down the drain,” Mould opined.

Sector peers SSE PLC (LON:SSE), Severn Trent PLC (LON:SVT), Pennon PLC (LON:PNN) and National Grid PLC (LON:NG.) went down with the United Utilities ship, with losses of between 2% and 4.1%.

9.50am: Retail sales slump

The mornings brace of UK economic releases has been every bit as frightening as feared.

The volume of retail sales in April fell by a record 18.1%, following the 5.2% decline in March, the Office for National Statistics (ONS) reported.

All sectors saw a monthly decline in volume sales except for a record increase in sales for non-store retailing at 18.0% and a continued increase in sales for alcohol stores at 2.3%.

Clothing sellers were particularly hard hit, with the volume of clothing sales halved from the previous month, when sales were down 34.9% month-on-month.

Coronavirus: Retail sales crash in April as lockdown hits shops https://t.co/j7Vm7WfGHK British clothing sales plummeted by 50.2% last month as many High Street stores were closed.

source https://t.co/DxL7HKiyQG

— news duniya (@Arju19596322) May 22, 2020

Sales at food stores were down 4.1% from March when sales were up 10.1% from Februarys level.

Aprils 15.2% decline erased more than seven years of gains, Berenberg Economics noted.

“That in-store retail dropped by 41.7% mom [month-on-month] while non-store retail rose by 18.0% and internet sales as a percentage of total sales surged to a record high of 30.0%, from 21.9% in March, suggests that a large part of the fall in spending was involuntary, though. While rising unemployment and a drop in confidence hurt household demand, most of the April plunge is likely due to the fact that non-essential shops were closed as part of the coronavirus lockdown,” the Berenberg team surmised.

The ONS also released public sector borrowing numbers with the central government net cash requirement in April rising to £63.5bn –

its highest level since the series began in April 1984.

Public sector net borrowing excluding public sector banks (PSNBex) was estimated at £62.1bn, a cool £51.1bn higher than it was in April 2019.

“Although fiscal year 2019/20 already seems an age away – the March budget deficit was revised up markedly to £14.7 billion from the previously reported £3.1 billion. Consequently, PSNBex for fiscal year 2019/20 was lifted to £62.7 billion from the previously reported £48.7 billion, meaning that it missed Marchs budget target of £47.4 billion by an increased margin of £15.3 billion; however, this really seems insignificant compared to the budget deficit that the UK is heading for in 2020/21,” warned Howard Archer, the chief economic advisor to the EY ITEM Club.

Samuel Tombs at Pantheon Macroeconomics is sticking with his prediction that public borrowing will equal about 15% of gross domestic product this year, even if a second virus wave is avoided.

To put that into perspective, the percentage topped out at about 10% in the 2008/09 credit crunch.

In the City, investors were more concerned about rising tensions in Hong Kong and the deteriorating relationship between the US and China.

The FTSE 100 was down 80 points (1.3%) at 5,935.

8.25am: Dour end to week

The FTSE 100 dropped back sharply in opening trade on Friday ahead of long Bank Holiday break as revived International trade war worries and fears over a second coronavirus wave put the skids under the benchmark.

The index of UK shares fell 112 points to 5,903.05, extending its recent poor showing.

President Donald Trump has said he will “react strongly” if Beijing goes ahead with plans to clamp down on Hong Kong following an uprising there. Concerns about an increase in the rate of new coronavirus infections in Hong Kong have also worried markets.

James Hughes of Scope Markets said: “Washington has continually blamed China for the Coronavirus pandemic, and last week blocked any chip supplies from the US to Chinese tech giant Huawei as well as passed legislation to make it harder for any Chinese firms to list shares on exchanges in the US."

“It was yet another sign that the US will continue to ramp up its overall offensive on China," he added.

China, meanwhile, has said it wont be setting a GDP growth target for the first time in 30 years amid the unprecedented economic decline due to the coronavirus pandemic.

In the UK, Asia-focused Prudential (LON:PRU) fell 5.8% amid worries over the health of the worlds second-largest economy. The miners, led by Anglo American (LON:AAL), down 5.2%, were also hit by the splashback from China.

The bad news on sales and dividends looked more than priced in for Burberry (LON:BRBY) as its shares rallied 2.5% higher after the fashion retailers lastest full-year results.

But bus company Go Ahead (LON:GOG) hit reverse gear, losing 18% after the sounding the coronavirus trading alarm.

Proactive news headlines:

Genedrive PLC (LON:GDR) shares jumped higher on Friday as the firm said its 96 SARS-CoV-2 Kit for detecting coronavirus (COVID-19) infections is now CE-IVD marked and available for commercial sale across the European Union (EU). Now that CE-IVD marking has been achieved, the company can commence commercial sales in the UK and across the EU immediately. The company said it will begin distribution to potential customers for initial clinical evaluations and aims to record first commercial sales in June. The Genedrive 96 SARS-CoV-2 Kit is a new polymerase chain reaction (PCR) diagnostic test designed to detect active infection in coronavirus (COVID-19) patients.

OPG Power Ventures PLC (LON:OPG) shares rose on Friday as the firm revealed that tariffs increased in its financial year ended March 31, 2020, following hikes in October 2018, and power generation ticked-up, though it remained cautious on the coronavirus (COVID-10) lockdown impact in India in the current year. In a trading and coronavirus (COVID-19) update, the developer and operator of power generation plants in India said its total generation (including deemed) was 2.72 billion units, up from the previous years 2.71 billion units figure, with its plant load factor (PLF) flat at 75%. The group said the average tariff in the period was Rs5.67, up 4.8% on the previous years Rs5.41 figure, which reflected a full years impact of tariff increases in October 2018 for captive users.

Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA) said it is planning to spin out its StemPrintER and SPARE genomics-based personalised medicine businesses as a separate stock market quoted company. This will allow the newly independent group to secure independent funding to accelerate the accelerated development of the StemPrintER genomic test, the group said. It will also ensure the demerged entity can focus solely on the personalised medicines market. Tiziana said its shareholders would benefit from holding shares in both Tiziana, which has a rapidly developing drug portfolio while realising the “standalone value” of StemPrintER operation as it progresses through its own development milestones.

One Media IP Group PLC (LON:OMIP) continues to trade in line with expectations, the group revealed ahead of its annual general meeting (AGM) on Friday. The intellectual property (IP) rights firm focused on the entertainment industry said the positive momentum referred to in its trading statement of May 6 has continued. Claire Blunt, the non-executive chairperson of One Media, is set to remind shareholders at the (virtual) meeting that “One Media is one of the few businesses which has been able to declare a dividend in challenging macro-economic times”.

DP Poland PLC (LON:DPP) has confirmed a 13% rise in system sales and more broadly a 16% increase in revenue during 2019, reflecting a business with some advantage when it comes to the reopening of the Polish economy after the coronavirus (COVID-19) lockdown. Some 82% of all delivery sales in 2019 were ordered online, the pizza franchise group added. “Our customers order their pizzas increasingly on our digital platforms, and pay for their orders on that platform too. In Poland we believe we are best in class on this front," Iwona Olbryś, DP Poland chief executive said in a statement.

Metal Tiger PLC (LON:MTR) has announced a new investment, subscribing for £570,000 worth of shares in Trident Resources PLC (LON:TRR) which is currently raising £16mln, with shares priced at 20p each, as it prepares to float on Londons AIM market. Metal Tiger has conditionally subscribed for some 2.85mln shares. Upon completion and listing, Metal Tiger will own some 2.75% of Tridents issued share capital. Trident is a growth-focused, diversified mining royalty and streaming company, aiming to provide investors with exposure to a mix of base and precious metals, bulk materials (excluding thermal coal) and battery metals.

KR1 PLC (LON:KR1) has said it will receive US$243,712 for its stake in digital asset custodian Vo1t after a takeover of the firm by Genesis Trading was approved by the majority of shareholders. The blockchain and crypto investment firm said the consideration will be paid in cash immediately following the closing of the deal, which is expected to take place on Friday. Vo1t was seed-funded by KR1 and served as the companys main digital asset custody solution from its early stages.

Tekcapital PLC (LON:TEK) noted that its investee company, Guident Ltd, has won the Florida Atlantic University (FAU) Tech Runway Annual Tech Launch competition as one of the “most promising start-ups in South Florida”. The IP investment firm said the competition, which included more than 200 contestants, provides start-ups with an opportunity to join a year-long program that offers winners “instruction, mentoring, networking, marketing, and capital-raising assistance, co-working space, events, intern support, and other vital programs”. Guident, which develops technology to enhance the utility, safety and enjoyment of autonomous vehicles and delivery drones, is seeking as its immediate objective to build and operate the first remote monitoring and control centre (RMCC) in Florida for ground-based delivery drones and autonomous vehicles.

Open Orphan PLC (LON:ORPH) has unveiled plans to raise up to £12mln by issuing shares at a premium to Thursdays closing price. The cash injection will allow the group to ramp up its coronavirus (COVID-19) antiviral testing to 3,000 a day; expand its laboratory services to meet demand from vaccine developers, and strengthen the balance sheet. It also wants to “take advantage of the significant and growing opportunities the board believes are available”. The City fundraiser is being done in two separate tranches: a placing of stock with investors conducted via an accelerated bookbuild process; and an offer for subscription to be conducted by PrimaryBid. The new shares are being issued at 11p each, a premium of just under 4% to Thursdays 10.6p closing price.

Tissue Regenix PLC (LON:TRX) has raised £14.6mln via a placing of shares at 0.25p each to fund the group's manufacturing capacity expansion programme in the US, which is commencing immediately, and for general working capital purposes. In total, 5.85bn new shares were issued via the placing and share subscription while a further 800mln shares were taken up by retail and other private investors through the PrimaryBid.com platform at the same price, raising an additional £2mln.

accesso Technology Group PLC (LON:ACSO) has raised just shy of £33mln through a share placing and subscription which it said will leave it “well placed” to navigate the crisis caused by the coronavirus (COVID-19) pandemic. The electronic ticketing and queuing specialist raised £32.3mln through the placing of around 11.3mln new shares and £0.6mln through a subscription of 212,414 shares both at a price of 290p per share, a 13.4% discount to accessos closing price on Thursday. The firm has also unveiled plans for an open offer at the same price to raise an additional £6.2mln.

ClearStar, Inc. (LON:CLSU), a provider of Human Capital Integrity technology-based services specialising in background and medical screening, has announced that it's annual general meeting (AGM) will be held at 11.00am EDT (4.00pm BST) on Tuesday, June 16, 2020, at the Company's office locRead More – Source