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FTSE 100 closes firmly higher with house builders leading the way

The blue-chip benchmark closed the day ahead by over 78 points, or 1.34%, at 5,940.

Barratt Developments - FTSE 100 to open higher on Wednesday; US ADP jobs report eyed
The housing sector was boosted on Wednesdasy by latest house price figures
  • FTSE 100 index closes up 78 points
  • Virgin Atlantic to go ahead with £1.2bn rescue deal
  • Top Footsie gainer is Barratt Developments

5pm: Footsie closes ahead

FTSE 100 finished on Wednesday firmly higher but still below 6,000 as big house builders took the top spots after Barratt Developments PLC (LON:BDEV) put out its full year results and a new report showed prices soared in August.

The blue-chip benchmark closed ahead by over 78 points, or 1.34%, at 5,940.

"Broadly speaking, European indices lost ground in the past two days, and today those losses have been mostly recovered," said analyst David Madden in a note.

"The mood on this side of the Atlantic is still optimistic in relation to the US coronavirus stimulus package, even though there are ‘serious differences’ between what the two sides want. Steven Mnuchin, the US Treasury Secretary, said that a ‘bipartisan agreement still should be reached’.

Top riser on Footsie was developer Barratt Developments PLC, which  saw its shares jump 8.58% to 546.80p  after it posted a £491.8mln profit before tax for the year to end-June, 2020, down from £910mln the year before.

But the firm noted it had seen a 62% increase in home completion volumes in the eight weeks to August 23, put down to a combination of pent-up demand, the Stamp Duty holiday “and an understanding that Help to Buy will only be available to first-time buyers and regional home price caps will exist from April 2021”.

Taylor Wimpey (LON:TW.) was the second biggest gainer on the FTSE 100, up 7.14% to 126.05p. The whole sector was buoyed as Nationwide reported a 2% rise in August house prices - the biggest gain in 16 years.

US and Canada 11.15am EST/ 4.15pm

Wall Street benchmarks were mixed in early deals in New York. The Dow Jones Industrial Average added over 22o points at 28,866, while the S&P500 gained around 22 at 3,548. The tech-laden Nasdaq exchange though, shed 6.7 points at 11,932. In Toronto, the TSX was up nearly 58 points, at 16,702.

3.30pm: Virgin Atlantic receives final approval for rescue deal

FTSE 100 was still up 73 points to 5,935 in late afternoon ahead of close.

Meanwhile, a London judge approved Virgin Atlantic’s £1.2bn rescue deal.

The Richard Branson-owned airline had warned it would run out of cash by the end of September if the rescue package was not going to be approved.

It is now set to complete this week, as shareholders, lenders, suppliers and major creditors had already shown thumbs up in July and August.

Virgin Atlantic is 51% owned by Branson’s Virgin Group and 49% by US airline Delta.

As part of the rescue package, the billionaire has agreed to inject an additional £200mln and arranged loans of £170mln with deferrals of fees from Virgin and Delta worth a further £400mln.

Virgin was turned down by the British government when it asked for a £500mln loan to help to ease its difficulties.

“Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel,” the airline told Reuters on Wednesday.

2.45pm: Wall Street still manages positive start despite ADP disappointment

The main Wall Street indices still managed to begin Wednesday’s session in the green despite August’s ADP jobs report falling well short of market expectations.

Shortly after the opening bell, the Dow Jones Industrial Average rose 0.38% to 28,755, while the S&P 500 rose 0.4% to 3,540 and the Nasdaq climbed 0.59% to 12,010.

Given the ADP disappointment, markets seem to have looked elsewhere for positivity, particularly reports the US Treasury Secretary Steven Mnuchin has restarted talks with House of Representatives Speaker Nancy Pelosi on a fresh round of stimulus.

Also potentially lifting markets were comments by National Institute of Allergy and Infectious Diseases director Anthony Fauci, who said a vaccine for coronavirus could come sooner than expected if the multiple firms working on such a product delivered outstanding preliminary results from trials.

Back in London, the FTSE 100 was up 75 points at 5,937 shortly after 2.45pm.

1.55pm: US ADP jobs report misses expectations by more than half

FTSE 100 pared its gains in the early afternoon, rising 74 points to 5,936.

The US reading on ADP employment came with a 428,000 increase, well below the 1mln consensus.

But experts say ADP series has always been a poor predictor of the official figures, especially during the pandemic.

“The ADP figures massively overstated the slowdown in payroll growth in July, but we suspect they will be closer to the mark in August,” said Michael Pearce, economist at Capital Economics.

“Note the official non-farm payrolls figure will be boosted by the nearly 250,000 temporary Census hires last month, which are not counted in the ADP measure, which focuses exclusively on private employment.”

Friday’s reading of nonfarm payrolls is expected to rise or by 750,000 excluding that Census hiring, “which would be a further sign that the recovery in the labour market is proceeding far slower than the rebound in consumption,” Pearce concluded.

12.40pm: US indices to open higher

FTSE 100 kept its gains at lunchtime, rising 102 points to 5,964.

Wall Street is also expected to open higher a day after tech behemoth Apple Inc (NASDAQ:AAPL) overtook the entire FTSE 100 in value, having hit US$2.2 trillion of market capitalisation.

On Wednesday all eyes are on the ADP nonfarm employment report ahead of Thursday’s weekly claims count and Friday’s main nonfarm payrolls print.

The ADP number is expected to show a gain of 1mln jobs in August from 167,000 in July.

Jack Daniels producer Brown-Forman Corporation (NYSE:BF.B) is also going to be in focus with its first quarter release.

In June it posted a 5% fall in fourth-quarter revenue to US$709mln due to the pandemic, with analysts wondering whether easier restrictions globally have helped summer trading.

11.40am: Sterling pares losses

The Footsie was still up 98 points to 5,960 before lunch, but sterling pared its losses, now down 0.1% to US$1.3366.

“Yesterday, the dollar index saw a lot of volatility as in early trading it dropped to a 28-month low, but it rallied in the afternoon, and finished in positive territory,” noted David Madden at CMC Markets.

“This morning, the dollar is building on yesterday’s gains as bargain hunting is pushing up the currency.”

The weaker pound has helped some internationally exposed stocks like GlaxoSmithKline PLC (LON:GSK), AstraZeneca PLC (LON:AZN), Diageo PLC (LON:DGE), Unilever PLC (LON:ULVR) and British American Tobacco PLC (LON:BAT), as the slip in sterling should help their revenue.

“The mood in Europe is bullish even though the landscape hasn’t changed too much in the past 24 hours,” added Madden.

“Hopes in relation to a vaccine for Covid-19 and optimism that US lawmakers will reach a compromise with regards to the coronavirus relief package are doing the rounds.”

10.45am: Unilever unveils environmental pledge 

The Footsie held its gains in late morning, adding 98 points to 5,960 after a rally earlier on Wednesday.

Big-cap Unilever PLC (LON:ULVR) added 2% to 4,534.43p after announcing an environmental pledge for its home care division.

The consumer goods giant set out a new ‘Clean Future’ plan to stop producing cleaning products with fossil fuels by 2030.

Across the wider company it is also looking to go net-zero by 2039, halve greenhouse gases and make product formulations biodegradable by 2030.

Over the next three years it also wants to stop using products obtained through illegal deforestation and halve the use of virgin plastic packaging.

9.50am: Housing market to come under pressure following August high

FTSE 100 kept climbing in mid-morning, rising 105 points to 5,967, while sterling shed 0.4% to US$1.3336.

The housing market is expected to come under pressure by the start of 2021 due to a significant rise in unemployment, as well as fading of the pent-up demand effect. 

Analysts at EY ITEM Club said there is more temporary support likely to come from buyers looking to take advantage of the Stamp Duty threshold increase before it ends, though there is a possibility that the Chancellor could extend it in the Autumn Budget.  

With house prices advancing 2% month-on-month in August, the largest monthly rise since February 2004, the decrease could be 3% than now by early 2021.

“Consumer confidence is still low compared to long-term norms and many people are likely to remain cautious for some time to come when making major spending decisions such as buying or moving house,” noted Howard Archer, chief economic advisor to the EY ITEM Club.

Meanwhile, the Office for National Statistics (ONS) resumed the release of UK House Price Index  following its suspension due to the impact of the COVID-19 pandemic.

The ONS will release estimates every fortnight until our regular publication of the August 2020 index in October.

On Wednesday it published May’s reading, which rose 2.9% in the first five months of 2020, up from 2.7% in April.

8.50am: Building a rally

The FTSE 100 push higher in early trade on Wednesday, reclaiming just over three-quarters of the 100-points it lost on Tuesday, helped by strength in the builders.

The index of UK blue-chips traded 77 points higher at 5,939.44.

The latest figures from the Nationwide revealed that house prices went up at their fastest pace in 16 years last month.

Leading the pack early on was Barratt Developments (LON:BDEV), up 4.2% after a cautiously optimistic outlook statement accompanying its prelims.

That said, dividends for the current year have been scrapped in the name of fiscal prudence, while the 2021 special payment is also gone.

Going forward, Barratt said it will cautious, making sure the payout is covered 2.5-times by earnings.

“The shares have had a strong recovery of late given this backdrop, having risen by 38% since the March nadir,” said Richard Hunter, analyst at Interactive Investors.

“Unfortunately this does not mask the damage inflicted by the pandemic in total, and a share price decline of 20% over the last year is both in line with the drop for the wider FTSE100 during the period and also proof positive of the stain which COVID-19 left.”

Recovering from Tuesday’s hit, Rolls-Royce (LON:RR.) rose 4% in the early exchanges.

For those sitting on stock in the property firm Hammerson (LON:HMSO) the share price rise of 344% might have initially prompted thoughts of bid interest. No such luck, the move was purely technical, reflecting the group’s stock consolidation.

Among the toddlers, Thor Mining (LON:THR) stood out after its latest drilling campaign delivered better than expected gold results. The shares advanced 13%.

Proactive news headlines:

Ferro-Alloy Resources Limited (LON:FAR) revealed that it has developed technology for the production of electrolyte for vanadium flow batteries (VFBs). The vanadium mining and processing company, with operations based in Southern Kazakhstan, said it has applied for a patent for the production of vanadium electrolyte directly from ammonium metavanadate (AMV). Vanadium electrolyte is used in the operation of VFBs. The ability to make electrolyte directly from AMV cuts out the cost of conversion of AMV to vanadium pentoxide from which electrolyte is usually made, giving the company not only the required know-how to enter this market, but also a cost advantage over traditional processes, it said.

Thor Mining PLC (LON:THR) said assays from the latest stream sediment sampling program at the Ragged Range project in its Pilbara Goldfields tenements in Western Australia have “exceeded management expectations”. The AIM-listed group said the results from 2020 detail sampling support extend from two 2019 test sites defining a zone of “highly anomalous gold”, with sampling results having also defined an overall broader target zone and demonstrated potential to host a “significant gold bearing system”. Thor also said samples defining the 13 kilometre gold target zone are from separate drainage catchments and supported the potential of gold mineralisation along the entire strike length.

Oncimmune Holdings PLC (LON:ONC) said it is “building momentum” with its ImmunoINSIGHTS offering after signing its fourth partnership agreement with a top-ten bio-pharma company in under four months. Oncimmune’s expertise will be deployed to in a pilot programme to profile patients receiving a type of cancer drug called an immune checkpoint inhibitor. Specifically, the aim is to assess which patients are most likely to tolerate and respond positively to the treatment. The programme, which will see the deployment of the biomarker discovery engine, SeroTag, is expected to be concluded by in the second quarter of next year.

BlueRock Diamonds PLC (LON:BRD), the AIM-listed diamond producer, has announced the sale of 3,805 carats of the gemstones and is changing its policy on the announcement of individual diamond sales. The group, which owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa, said the stones were sold at an average price of US$330 per carat for an aggregate consideration of US$1,255,000. The group said, it is modifying its announcement policy such that for the foreseeable future BlueRock will announce all individual diamonds valued at above US$50,000 when formally valued.

Tissue Regenix Group PLC (LON:TRX) has reported significantly reduced losses in the first half of its current year as the company highlighted continued “strong” demand for its products despite market disruption caused by the coronavirus pandemic. For the six months ended June 30, 2020, the regenerative medicine group reported an underlying EBITDA loss of £2.1mln, narrowed from a £3.6mln loss in the prior year, while revenues were maintained at the same level as a year ago at £6.1mln. The company also highlighted a reduction in its overhead cost base to £5.5mln from £7.1mln in the first half, adding that it has also secured additional distribution agreements in the period for its Matrix OI, DentalFix and AmnioWorks products to diversify its sales portfolio.

Zoetic International PLC (LON:ZOE) has announced a deal to sell its legacy oil and gas assets located in Colorado. The deal is worth US$376,000 though minimal net proceeds will be retained once a US$276,574 debt is repaid to ANB Bank and historic amounts due to operator True Oil are paid. The company expects final proceeds will be less than US$20,000 Significantly, with the exit from oil and gas business, the Cannabis and CBD products company will eliminate the group’s most substantial liabilities and operating costs.  Zoetic, for example, expects to save around US$1mln per year from the closing of its natural resources office.

MetalNRG PLC (LON:MNRG) has highlighted “good progress” to date on a number of projects as it delivered results for the first half of its current year. The natural resource investment and exploration group said during the six months to June 30, 2020, it has completed two campaigns at its Goldridge asset in Arizona which had presented “extremely encouraging results” and affirmed its belief that the project is “a unique exploration and production opportunity with demonstrable high-grade mineralisation and the potential for early avenues to revenue generative processing and a larger scale exploration opportunity”.

Amur Minerals Corporation (LON:AMC) announced that it has appointed Adam Habib as its president and an executive board member with effect from September 1, 2020. The group said Habib will continue to guide and advance funding and strategic partnership considerations allowing for the continued development of the company's far east Russian Kun-Manie nickel and /copper sulphide project. The company added that its focus will be on the execution of Binding Offtake Contract(s) and funding of the mutually supportive Russian and Western Definitive Feasibility Studies.

Live Company Group PLC (LON:LVCG) said it has signed a new contract with Hadran in Israel for a BRICKLIVE Brickosaurs tour that will run from October 2020 until May 2021. "Our strategy of maximising year-round asset utilisation by continuing to build on our relationships in the Southern Hemisphere has started to come into fruition”, Live Company chairman David Ciclitira said in a statement. “This means that Brickosaurs is now sold out until November 2021 with ongoing discussions for it to tour in Asia throughout 2022. We also have signed contracts in South Africa with BRICKLIVE Ocean for December 2020 and are in advanced conversations with clients in Australia for a potential Touring Show at the end of 2021", he added.

Ariana Resources PLC (LON:AAU) told investors it has unearthed a new high-grade gold vein at the Kiziltepe mine in Turkey. The vein was discovered in the hanging-wall of the Arzu South part of the mine. Testing yielded grades of up to 6.09 grams per tonne plus 107.58 grams per tonne silver. Ariana at the same time noted what it described as further significant results that show the potential for underground development at Arzu South. It includes highlight results with 2.18 to 3.39 grams per tonne gold and 31.68 to 53.53 grams per tonne silver in intersections of around 10 metres.

ImmuPharma PLC (LON:IMM) said it has raised £6.5mln via an oversubscribed share placing with the cash earmarked to develop the group's drug pipeline. New and returning investors were given the chance to acquire shares at 11p each. Backers of the fundraiser, Stanford Capital Partners and SI Capital, meanwhile, were granted warrants exercisable at 11p under the terms of the deal. The cash injection will be used to bring through new promising targets, including BioAMP-B, for the treatment of fungal infections such as the lung condition aspergillosis.

Premier African Minerals Limited (LON:PREM) has provided an initial update on the recent site visit and preliminary geological review of the Mozambique tenement it recently secured. The group said among the highlights are an extensive current and historic artisanal gold mining activity in the immediate area and extending onto the tenement. It also noted widespread evidence of eluvial, alluvial and primary gold mineralisation and visible gold in multiple locations.

6.50am: Rebound (of sorts) predicted 

The FTSE 100 is expected to open higher on Wednesday as markets look set to rebound from yesterday’s slump.

Spread-better IG expects the UK blue-chip index to start around 41 points higher following Tuesday’s 101 point fall to 5,862.

The Footsie looks set to take its lead from a strong performance on Wall Street overnight, which saw the Dow Jones Industrial Average close 0.76% higher at 28,645, while the S&P 500 climbed 0.75% to 3,526, and the Nasdaq Composite rose 1.39% to 11,939.

Markets in Asia were more mixed on Wednesday, with Japan’s Nikkei 225 up 0.22% while Hong Kong’s Hang Seng fell 0.51% following news that Australia has entered its first recession in just under 30 years.

The US ADP job figures, which are due at 1.15pm UK time are expected to show 950,000 jobs were added last month, up from 167,000 in July, and may serve as a signal for some investors to push higher in the afternoon. Traders may also keep an eye on Bank of England governor Andrew Bailey’s testimony before the UK Treasury Select Committee at 2.30pm.

On currency markets, the pound was trading relatively flat against the dollar at US$1.338, with the ADP jobs report potentially providing a movement catalyst ahead of the critical US non-farm payroll report on Friday.

Significant announcements expected on Wednesday:

Finals: Barratt Developments PLC (LON:BDEV), Mattioli Woods PLC (LON:MTW)

Interims: The Gym Group PLC (LON:GYM), Concurrent Technologies PLC (LON:CNC), Johnson Service Group plc (LON:JSG), Uniphar PLC (LON:UPR), Woodbois Limited (LON:WBI)

Economic data: UK house prices, US ADP unemployment

Around the markets:

  • Sterling: US$1.338, down 0.03%
  • Brent crude: US$45.99 a barrel, up 0.88%
  • Gold: US$1,963 an ounce, down 0.4%
  • Bitcoin: US$11,897, up 1.58%

6.45am: Early Markets - Asia/Australia

Mainland Chinese stocks were mixed by the afternoon on Wednesday, with the Shanghai Composite down 0.11% while Japan’s Nikkei 225 gained 0.47%.

South Korea’s Kospi added 0.3% but Hong Kong’s Hang Seng index slipped 0.05%.

Australia’s S&P/ASX 200 led gains among the region’s major markets as it surged 1.74%. However, the country’s GDP fell 7% in the June quarter, its largest quarterly fall on record according to the Australian Bureau of Statistics.

Proactive Australia news:

Australia is a hothouse for growth companies with some of the country’s most innovative businesses going on to achieve major international success.

A showcase for the latest generation is provided by the ASX Small and Mid-Cap Conference (ASX Ltd - ASX:ASX), which this year is taking place virtually from September 8-10.

Wiluna Mining Corporation Ltd (ASX:WMX) (OTCMKTS:WMXCF) has been as much as 30% higher after fielding hits of up to 5.96 metres at 112.98 g/t from 230.44 metres in resource development infill drilling at the Wiluna Mining Centre.

XTEK Ltd (ASX:XTE) has completed an oversubscribed share purchase plan (SPP) to raise $2.9 million, taking overall capital raising funds to $12 million.

Great Boulder Resources Ltd (ASX:GBR) has extended the closing date for its non-renounceable entitlement offer aimed at raising up to $960,000 by five business days to Friday, September 11.

YPB Group Ltd’s (ASX:YPB) CONNECT codes, which confirm product authenticity, will be used in NATURE ONE DAIRY®’s (NOD) nutritionally enhanced milk powders, including baby formula, across South East Asia.

Blackstone Minerals Ltd (ASX:BSX) has intersected further high-grade massive sulphide nickel-copper-PGE mineralisation at Ban Chang, which forms part of the Ta Khoa project in Vietnam.

Kin Mining NL(ASX:KIN) has received strong results from recent aircore drilling revealing that East Lynne prospect at Cardinia Gold Project (CGP) in Western Australia continues to the south and now extends for more than 1.3 kilometres of strike length.

Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SBMSF) has completed EPCM phase two work for the Colluli Potash Project in Eritrea, East Africa, with the updated FEED and schedule providing a more defined scope and de-risked design.

FYI Resources Ltd (ASX:FYI) has met target grade expectations of >99.99% ultra-high purity alumina (HPA) with recently completed stage-two continuous trial production of HPA from its pilot plant.

VIP Gloves Ltd (ASX:VIP) is set to enjoy strong revenue and earnings growth in the next two financial years as four new production lines come on-stream progressively and demand for gloves continue in a post-COVID 19 setting.

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