Senin, 16 November 2020

FTSE 100 finds fresh impetus after latest vaccine news; hospitality plays in demand - Proactive Investors UK

  • FTSE 100 rises 114 points
  • US indices open mostly higher
  • Oil price surges 

3.10pm: Oil stocks wanted as Brent crude rises above US$44 a barrel

The Footsie looks like it will be coasting to the end of play, having received a significant fillip this morning from Moderna Inc.

London’s index of leading shares was up 114 points (1.8%) at 6,430, helped by the heavily-weighted oil giants Royal Dutch Shell PLC (LON:RDSB) and BP PLC (LON:BP.) hitching up their petticoats and breaking into a sprint on the expectation that the latest vaccine news will see a return to normal – i.e. burning fossil fuels like there is no tomorrow – earlier than previously expected.

Shell was up 5% at 1,170.6p and BP was 4.7% firmer at 247.95p, reflecting a sharp surge in the oil price; Brent crude for January delivery was up US$1.26 to US$44.04 a barrel, ahead of tomorrow’s OPEC+ meeting.

2.45pm: Wall Street mostly higher

The main Wall Street indices were mostly in the green at the start of Monday’s session as positive vaccine news gave equities a shot in the arm.

In the first minutes of trading, the Dow Jones Industrial Average was up 1.1% at 29,806, while the S&P 500 climbed 0.58% to 3,606. The Nasdaq, meanwhile, was mostly flat at 11,830.

The tech-heavy index may have been weighed down by rotations out of tech stocks into other equities as the pandemic shows signs of coming to an end, attracting investor attention to other defensive and income stocks.

Meanwhile, shares in Moderna, the developer of the vaccine behind today’s market surge, was up 9.3% at US$97.74, while rival vaccine developer Pfizer, which unveiled 90% effectiveness last week from its vaccine made in partnership with BioNTech, fell 2.5% to US$37.66 in early deals.

Back in London, the FTSE 100's rally had lost a little steam but the index was still 113 points higher at 6,430 at 2.45pm.

2.00pm: FTSE 100 finds fresh impetus

How many “shot in the arm” references can a reporter squeeze into a rolling update on the stock market?

Well, prepare yourself for more as the Footsie powers higher – up 137 points (2.2%) at 6,453 – after US biotech Moderna said tests of its COVID-19 vaccine in a large trial had been 94.5% effective.

The news has not been wholly welcomed by the investment community; diagnostics firm Novacyt SA (LON:NCYT), which has a number of COVID tests in production or under development, saw its shares lose 11% of their value at 800p. The fall is not as extravagant as the plunge the shares took when the Pfizer/BioNTech vaccine news broke earlier this month but it has still taken the gloss off the share price, although given the shares started the year at around 14p, long-term holders are still sitting on a tidy profit.

“The pent up demand for dining out which is forecast to be unleashed when restrictions ease has taken a chunk out of the share price of Just Eat Takeaway and Ocado. Both firms have reaped huge rewards during the pandemic as millions opted to order in deliveries at home but the expectation is that this trend may now be on the wane sooner rather than later,” observed Susannah Street at Hargreaves Lansdown.

“The FTSE 100 was up immediately when news of the early results from the Moderna tests came in and the feel-good factor created by Pfizer’s vaccine should further rally markets in the days ahead,” said Ayush Ansal, the chief investment officer at the hedge fund, Crimson Black Capital.

“More than anything markets need certainty and the knowledge that the pandemic could be brought under control a lot sooner than most imagined could see stocks surge as sentiment rebounds.

“The light at the end of the tunnel for the global economy following the Covid-19 crisis may not be a train after all,” Ansal said (I edited out the bit that mentioned a “metaphorical shot in the arm” for markets.

Among those celebrating the vaccine news most heartily were restaurants group Tasty PLC (LON:TST), bars operator Revolution Bars Group PLC (LON:RBG) and cinema chains operator Cineworld Group PLC (LON:CINE); all three stocks are sporting gains of more than 13%.

12.40pm: Moderna Inc reports positive COVID-19 vaccine trial

More promising vaccine news – this time from Moderna Inc’s candidate – is set to lure buyers into the market when Wall Street opens today.

The Dow Jones index is expected to storm almost 500 points higher to 29,978 while the broader-based S&P 500 is expected to open 41 points heavier at 3,626.

The tech-heavy NASDAQ, which has outperformed since traders started rotating back into stocks that were hit hard by the lockdown, is tipped to open 120 points higher at 11,949.

Shares in Moderna were up by around one-eighth after the company said its COVID-19 vaccine candidate met its primary endpoint in a Phase 3 trial, with 94.5% efficacy.

The efficacy rate compares very favourably with the test results from the vaccine being developed by Pfizer/BioNTech and it is believed that Moderna’s vaccine will also not require the heavy-duty freezing in transit that will be required by the Pfizer/BioNTech vaccine.

The vaccines are appearing over the hill not a moment too soon, judging by the latest US coronavirus cases statistics.

The Covid Tracking Project reported 146,000 new US cases yesterday, up 31% from the 111,000 reported on Sunday last week.

The only good news is that the rate of increase in new cases might have topped out.

US Covid-19 cases

“This is a positive sign, but we need to see more data before we can be sure it is a real shift and not just noise. The test positivity rate continues to increase and is now trending above 12%, high enough to suggest that many cases are undetected, so the risk of a renewed acceleration is real,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

According to Daiwa Capital Markets, the United States is “facing an interesting combination” of contrasting pandemic-related developments: the spread of the coronavirus has accelerated dramatically, while at the same time drug companies have noted substantial progress in developing a vaccine.

“The development that dominates over the next few months will have a profound influence on the performance of global economies and financial markets. At this point, we favour an optimistic view on the likely outcome. Our favourable view largely reflects prospects for a vaccine, but it also has been influenced by the recent performance of the economy, which seems to be holding up reasonably well despite the surge in the number of new Covid cases,” Daiwa said.

On the macroeconomic front, the New York Fed is set to release its manufacturing survey for October today.

On the corporate front, updates are expected from Palo Alto Networks, Tyson Foods and Casper Sleep.

“Casper Sleep Inc is in focus as it will post its third-quarter numbers later. In August, the company posted its second-quarter results and the loss per share was 16 cents, while the consensus estimate was for a loss per share of 18 cents. Revenue increased by 16% to US$110.2 million, topping the US$104.8 million forecast. E-commerce sales helped offset the decline in in-store sales because of the lockdowns,” said CMC’s David Madden.

Back in the UK, euphoria over Moderna’s announcement has been tempered somewhat by that noisy Brexit clock ticking away in the background.

Brexit talks resume in Brussels but few are holding their breath in anticipation of a breakthrough, even after some of the Prime Minister’s most pro-Brexit advisors have been shown the door – one of them even choosing ostentatiously to leave by the front door despite the back door apparently being a lot closer to his (former) office.

EU leaders are set to hold a teleconference on Tuesday.

“With time running out, that event might act as the trigger for new attempts at the highest political level to reach a compromise deal, settling the outstanding issues related to the level playing field, governance and fish; however, given Johnson’s personnel problems back in Downing Street, it seems highly unlikely that this will be the week for him to seek a deal, for risk of being perceived too soft on Brussels now that Cummings and Cain have departed,” Daiwa said.

The FTSE 100 was up 111 points (1.8%) at 6,428.

11.30am: House prices come off the boil

The average price of a property coming to market in November dipped by by 0.5% (£1,505) from October, according to Rightmove.

The property listings web site said prices eased “despite continuing strong buyer demand as new sellers join the rush to sell and beat the March stamp duty deadline”.

National sales agreed in October were up 50% year-on-year, and Rightmove now estimates there are 650,000 sales going through the buying and selling process, 67% more than at the same time in 2019.

“Given the ongoing mini-boom, prices might have been expected to rise again this month, but instead we have a slight dip which could be a result of some new sellers pricing more realistically to have a better chance of agreeing a sale in time to benefit from the stamp duty savings on their onward purchase,” said Tim Bannister, Rightmove’s director of property data.

“We know from a recent Rightmove study that sellers are twice as likely to sell if they agree a sale based on the first price at which their property goes on the market, something that’s even more important now as we move towards the end of March and the end of the stamp duty holiday. If your initial asking price is too high then you’re less likely to get an offer even after you’ve cut your price back to a more realistic level. Our revised prediction of a 7% annual increase in prices in 2020 looks to be on track, since the annual rate has jumped to 6.3% with a month to go,” he added.

The FTSE 100 was up 41 points (0.6%) at 6,357.

10.15am: A shot in the arm for equities

Coronavirus vaccine news continues to provide a shot in the arm for UK blue-chips, especially those hit hardest during this year’s lockdown periods.

The FTSE 100 was up 49 points (0.8%) at 6,365.

“The European markets awoke to another dose of vaccine positivity this Monday, temporarily inoculating them to the horrifying Covid-19 numbers coming out of the US,” said Connor Campbell of Spreadex.

“Though it’s not much of an update on what was previously stated, the chief executive of BioNTech, Ugur Sahin, has claimed that transmission of Covid-19 will be reduced by ‘maybe 50%’ following the vaccine rollout, itself leading to a ‘dramatic reduction of the pandemic spread’.

“Those comments were followed by news this Monday that 6,000 British volunteers are participating in the phase 3 trials of the vaccine being developed by Johnson & Johnson subsidiary Janssen.

“Investors are also waiting on progress reports from Moderna and AstraZeneca, the latter of whom is partnered with Oxford on the university’s promising preparation,” he added,

The index was largely being led higher by aerospace-related stocks and those in the hospitality sector.

British Airways owner International Consolidated Airlines SA (LON:IAG) was 6.8% higher; aeroplane engine maker Rolls-Royce Holdings PLC (LON:RR.) was 6.2% higher and Melrose Industries PLC (LON:MRS), which owns the aerospace and automotive engineer GKN, was up 4.5%.

In the hospitality sector, Premier Inns owner Whitbread PLC (LON:WTB) was 4.9% firmer and InterContinental Hotels Group PLC (LON:IHG) was 3.9% to the good.

The fiscal first-quarter trading statement from technology firm Smiths Group PLC (LON:SMIN), which has some exposure to the aerospace sector, got the thumbs-up from investors.

The shares rose 2.7% to 1,544p after the FTSE 100 firm said it was confident of meeting market expectations for the financial year to July 2021 after a fall in revenue in the first quarter.

8.50am: Vodafone numbers strike the right tone 

The FTSE 100 opened firmly in the green, taking its cue from Asia’s buoyant markets.

Wall Street’s positive close on Friday helped boost sentiment, while the formation of the Regional Comprehensive Economic Partnership also seemed to put a pep in the step of traders.

This is a new trading bloc that has seen heavyweight economies such as China, Japan and South Korea join forces with Australia, New Zealand and Chile.

A better than expected 5% expansion in the Japanese economy, meanwhile, appeared to counteract the retail sales miss by China.

Here in London, all eyes were on Vodafone, which is the first of a handful of blue-chip companies reporting this week.

The shares opened 3.9% higher after the telco proved resilient to the pandemic slowdown in business travel.

Richard Hunter, head of capital markets at Interactive Investors, had this to say of Vodafone’s interims: “Overall, the industry remains one where for customers, price dominates, regardless of the improvements which individual service providers may be making under the bonnet.

“The commercial progress which Vodafone is making is, nonetheless becoming clearer. Excluding roaming, second quarter service revenues increased by 1.5%, which is promising for post-pandemic prospects.”

Leading the risers with a 5.5% gain was Rolls Royce (LON:RR.), a pandemic bounce-back stock. On the FTSE 250, Cineworld (LON:CINE) , up 6.7%, was also in recovery mode.

Proactive news headlines

Remote Monitored Systems PLC (LON:RMS) said its subsidiary, Pharm 2 Farm Limited (P2F) is anticipating excess demand for its antiviral face masks which may outstrip the production line capacity of 5mln masks per month. The AIM-listed firm said that to fulfil part of the expected excess demand, P2F will supply its patented filter material, initially, to certain partner mask manufacturers until it has procured its own additional production lines.

Sensyne Health PLC (LON:SENS) said its strategic research agreement with Somerset NHS Foundation Trust has helped it achieve a major objective set at its 2018 IPO of growing its ‘anonymised’ database to over 5mln patient records. The latest tie-up pulls in 1.1mln unique records from a population of 600,000. In total, the company now has information for 5.6mln patients.

Inspiration Healthcare Group PLC (LON:IHC) said it has received confirmation from the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) to proceed with clinical testing for Project WAVE, a respiratory device it has designed for use in neonatal intensive care.

Supermarket Income REIT PLC (LON:SUPR), the specialist grocery site investor, has acquired a new site in at Beaumont Leys, Leicester from British Land and occupied by Tesco Extra and discount chain Aldi.

DeepVerge plc (LON:DVRG) said it has started deployment of its Microtox PD near-source wastewater contamination test equipment into water treatment plants in Ireland, with first shipments to China and the US expected by the end of the year. DeepVerge also said that it has agreed to license a patented breathalyser from PulMoBioMed, a spin-out technology company of Northumbria University, to capture coronavirus particles in breath condensate for the DeepVerge optofluidic breath test, known as Microtox BT.

Symphony Environmental Technologies PLC (LON:SYM) has announced the launch of a new reusable plastic bag product designed to keep climacteric fruit and vegetables – those that continue to ripen after being picked – fresher for longer. The SYMFresh ‘press’n’seal’ fruit and vegetable bags have been made with Symphony's d2p ethylene adsorber technology, a microporous structure which adsorbs and traps the ethylene inside the film, delaying ripening and regulating moisture, to slow down the drying out process.

Iconic Labs PLC (LON:ICON) said it has signed a management services agreement with Irish publishing brand Lovin’ Media following its acquisition by Greencastle Acquisition Limited. The media and technology firm said it will take over responsibility for all operational and strategic management of Lovin’s Media with immediate effect, and that it will be paid a monthly management fee of £10,000 plus external costs as well as 25% of all profits if certain revenue and profit targets are met.

Frontier IP Group (LON:FIPP) said one of its portfolio companies, Fieldwork Robotics, has received a £145,000 grant from the Sustainable Innovation Fund.

Oracle Power PLC (LON:ORCP) has acquired two highly prospective gold projects in Western Australia. The acquisition of the projects will be satisfied by a payment of £90,000 in cash and the issue of just under 43mln shares, with warrants at 1.1p attached. 

Sunrise Resources PLC (LON:SRES) has completed the processing of a 100 ton bulk sample of perlite taken from its CS Pozzolan-Perlite project in Nevada, USA. The company also updated on progress at other projects.

Panther Metals PLC (LON:PALM) is acquiring the Merolia gold project near Laverton, Western Australia, from White Cliff Minerals Ltd for cash and shares. Panther will pay A$112,500 in cash on the successful completion of a due diligence period, as well as 734,470 shares. 

Block Energy PLC (LON:BLOE) told investors that the early production facility (EPF) at the West Rustavi oil and gas field is now ready to receive gas. It is now connected to the WR-16aZ and WR-38Z wells which presently remain shut-in until a gas sales line has been constructed and gas sales can begin.

TomCo Energy PLC (LON:TOM) has raised £3.5mln which is earmarked to progress plans of Greenfield Energy, the company’s joint ventures with Valkor LLC.

Stobart Group Ltd (LON:STOB) said Aer Lingus has opted not to make Stobart Air the preferred supplier for a new commercial agreement due to start in 2023. Stobart Air will continue to operate the Aer Lingus franchise until the end of 2022. 

Zoetic International PLC (LON:ZOE) said its joint-CEOs, Trevor Taylor and Antonio Russo, each has purchases 500,000 ordinary shares. Taylor and Russo now each hold 6.95mln ordinary shares, equivalent to roughly 3.57% of the company apiece.

IronRidge Resources Limited (LON:IRR) has appointed Amanda Harsas as full time chief financial officer with immediate effect. Harsas, who will not sit on the board, has more than 20 years' experience in strategic finance, business transformation, commercial finance, customer and supplier negotiations and capital management, working across several sectors=.

Jubilee Metals Group PLC (LON:JLP) said it will host a webcast this Wednesday, ahead of its annual general meeting on December 3. Shareholders will have an opportunity to engage with the board for a general company update and discussion of the group annual results on November 18 at 9am UK time (11am SA time). 

Brickability Group Plc (LON:BRCK) said its chief financial officer, Stuart Overend, will be taking a leave of absence due to ill health.

Mkango Resources Ltd (LON:MKA)(CVE:MKA) has highlighted the launch of a new website for Maginito Ltd (www.maginito.com), together with a new Maginito company presentation. Maginito is 75.5% owned by Mkango, which is completing a feasibility study for the Songwe Hill rare earths project in Malawi, and 24.5% owned by Talaxis Ltd, which is focused on investment in and development of technology metal opportunities.

6.23 am: Positive start predicted

The FTSE 100 look set to get off to a positive start to the trading week, taking its cue from Asia’s main markets.

The big driver behind the positivity was the formation of the Regional Comprehensive Economic Partnership.

This is a new trading bloc that has seen heavyweight economies such as China, Japan and South Korea join forces with Australia, New Zealand and Chile.

“The fact that the agreement got over the line after eight years of negotiation between a widely disparate group of nations, is an achievement in itself,” said Jeffrey Halley, senior market analyst at OANDA.

“That has left the Asia-Pacific with a feeling that there is life in the world, with or without the United States. Asia Pacific stock markets have rallied, oil has risen, and the US Dollar has gently fallen today.”

A better than expected 5% expansion in the Japanese economy also helped lift sentiment in the region – so much so that the retail sales miss by China was largely forgiven.

Back here in the UK, Boris Johnson’s reboot plans after the departures of chief adviser Dominic Cummings and head communications, Lee Cain, have taken a hit.

On Sunday evening it emerged the PM has been forced to self-isolate after coming into contact with a Tory MP who later developed COVID-19 symptoms.

From Westminster to the City

It is expected to be another busy week with corporate updates scheduled from Vodafone (LON:VOD), Imperial Brands (LON:IMB), Royal Mail (LON:RMG) and easyJet (LON:EZJ).

Inflation and retail sales data should provide an update on the health (or otherwise) of UK PLC.

On the markets

  • Pound US$1.3224 (+0.27%)
  • Bitcoin US$16,213.85 (+0.78%)
  • Gold US$1,890.00 (+0.20%)
  • Brent crude US$43.25 (+1.1%)   

6.45 am: Early Markets: Asia / Australia

Asian markets surged today after 15 countries in the region signed a deal to form the world’s largest trade alliance, the Regional Comprehensive Economic Partnership (RCEP).

The alliance, which marks the first time that China, Japan and South Korea are in a single trade agreement, aims to gradually reduce tariffs across many areas.

In Japan, the Nikkei 225 jumped 2.05%, while South Korea’s Kospi was up 1.83%.

China’s Shanghai Composite rose 0.81% and Hong Kong’s Hang Seng index gained 0.60%.

In Australia, the S&P/ASX 200 made gains in early trading to rise 1.23% but a system failure halted the market and forced it to close early.

Proactive Australia news:

Castillo Copper Ltd (ASX:CCZ) (LON:CCZ) (FRA:7OR) has observed broad copper oxide and sulphide mineralisation at shallow depths in the first seven drill holes at Big One Deposit within the core Mt Oxide Project in northwest Queensland.

Alicanto Minerals Ltd (ASX:AQI) has a maiden JORC 2012-compliant inferred resource of 500,000 ounces at 1.8 g/t gold for its 100%-owned Arakaka Gold Project in Guyana, South America.

CV Check Ltd (ASX:CV1) achieved its best sales for an October month on record boosted by first orders from recent new client wins and a broad-based strengthening of demand across its client base.

Walkabout Resources Ltd's (ASX:WKT) initial reconnaissance soil sampling program completed at the 100%-held Amani Hard Rock Gold Project in southwest Tanzania, has identified multiple gold anomalies which it believes confirms the hard rock potential of the project tenure.

Horizon Minerals Ltd (ASX:HRZ) has poured first gold in its third toll milling campaign from trial mining at Boorara Gold Mine, which is 10 kilometres east of Kalgoorlie-Boulder in the Goldfields of Western Australia.

PNX Metals Ltd (ASX:PNX) has allowed the exclusivity period relating to a proposed joint venture for the funding of infrastructure and production sharing for its 100% owned Fountain Head Gold deposit to lapse.

St George Mining Ltd (ASX:SGQ) is buoyed by further positive exploration results from the flagship Mt Alexander Project in the north-eastern Goldfields of Western Australia.

Havilah Resources Ltd (ASX:HAV) (FRA:FWL) has raised $2.55 million in an oversubscribed placement to institutional and sophisticated investors with funds to advance the company’s key projects in northeast South Australia, near the mining stronghold of Broken Hill.

Emmerson Resources Ltd (ASX:ERM) has entered a new strategic alliance with Tennant Consolidated Mining Group (TCMG) for the Northern Project Area (NPA) of Tennant Creek in Northern Territory aimed at driving aggressive gold exploration, production and royalty streams.

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2020-11-16 14:02:39Z
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