ADVFN Morning London Market Report: Monday 23 March 2020

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London open: Stocks plunge again as US stimulus deal stalls; Covid-19 updates roll in

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It was a bloodbath again in London’s equity markets amid growing concerns about the impact of the coronavirus, with US Senate deadlock over stimulus souring the mood further as investors waded through another deluge of Covid-19 updates.

At 0830 GMT, the FTSE 100 was down 4.6% at 4,951.09.

Spreadex analyst Connor Campbell said: “Europe’s meagre rebound managed at the end of last week was quickly wiped out come Monday morning, as investors woke up to partisan deadlock over the proposed US stimulus plan.

“Arguing, in the words of Chuck Schumer, that the $1.8 trillion package is a ‘large corporate bailout with no protections for workers and virtually no oversight’, the Democrats blocked the bill on Sunday night, with a 47-47 split leaving it short of the required 60 votes.

“Even if the reasons behind the Democrats’ intransigence are sound, America’s inability to move things forwards stands in contrast to many of its now free-spending peers, and has sent the market into another tailspin.”

On the corporate front, the Covid-19 updates kept rolling in.

Oil giant Shell was in the red after saying it was cutting capital expenditure, underlying operating costs and postponing the next phase of its share buyback to conserve cash in the face of the Covid-19 pandemic. The company said it would cut underlying operating costs by $3bn – $4bn a year over the next 12 months compared to 2019 levels and reduce cash capital expenditure to $20bn or below for 2020 from a planned level of around $25bn.

Associated British Foods slumped as it said Primark’s decision to close all its stores will cost £650m a month in lost sales. ABF said it was cutting costs at Primark and that these measures together with government support should allow it to recover about half of operating costs.

Broadcaster ITV lost ground after it scrapped its dividend and withdrew market guidance as the coronavirus crisis ate into advertising revenues and forced the broadcaster to put productions on hold.

Transport operator Stagecoach slid as it issued a profit warning and said it was unlikely to pay any further dividends as the coronavirus pandemic hit passenger numbers.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Morrison (wm) Supermarkets Plc +0.30% +0.55 185.55
2 Sainsbury (j) Plc +0.10% +0.20 206.00

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.

 

# Name Change Pct Change Cur Price
1 Ferguson Plc -14.65% -682.00 3,974.00
2 Informa Plc -11.09% -42.30 339.00
3 Marks And Spencer Group Plc -10.96% -11.82 95.98
4 Johnson Matthey Plc -10.83% -202.50 1,667.50
5 Ashtead Group Plc -10.50% -153.00 1,304.00
6 Compass Group Plc -10.27% -113.90 995.60
7 Melrose Industries Plc -10.15% -10.10 89.40
8 Next Plc -10.09% -404.00 3,600.00
9 Carnival Plc -10.02% -88.80 797.00
10 Rolls-royce Holdings Plc -9.54% -34.30 325.10

 

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Share Type Amount Price Return Ex-Date Pay Date
Capital & Regional plc Final 11p £1.57 7.00% 02-Apr-20 26-May-20
Standard Life Aberdeen Plc Final 14.3p £2.05 7.00% 02-Apr-20 19-May-20
Provident Financial plc Final 16p £2.79 5.70% 02-Apr-20 22-May-20
Somero Enterprises Inc – Ordinary Shares – Reg S Final 11.123p(14c)(E) £2.12 5.20% 02-Apr-20 24-Apr-20
Phoenix Group Holdings Plc Final 23.4p £5.65 4.10% 02-Apr-20 19-May-20
Man Group Limited Final 4.052p(5.1c) £1.02 4.00% 02-Apr-20 15-May-20
Mondi Final 49.475p(55.72¢) £13.00 3.80% 02-Apr-20 14-May-20
TP ICAP Plc Final 11.25p £3.17 3.50% 02-Apr-20 19-May-20
IMI plc Final 26.2p £7.70 3.40% 02-Apr-20 15-May-20
Travis Perkins plc Final 33p £10.56 3.10% 02-Apr-20 13-May-20
Moneysupermarket.Com Group Plc Final 8.61p £2.76 3.10% 02-Apr-20 14-May-20
Taylor Wimpey Final 3.8p £1.57 2.40% 02-Apr-20 15-May-20
Melrose Industries Plc. Final 3.4p £1.41 2.40% 02-Apr-20 20-May-20
Synectics Plc Final 3.5p £1.48 2.40% 02-Apr-20 07-May-20
CLS Holdings Final 5.05p £2.33 2.20% 02-Apr-20 29-Apr-20
Intercontinental Hotels Group Final 68.246p(85.9c) £33.32 2.00% 02-Apr-20 14-May-20
ConvaTec Group Plc Final 3.162p(3.98c) £1.63 1.90% 02-Apr-20 14-May-20
VinaCapital Vietnam Opportunity Fund Limited Interim 4.688p(5.9c)(E) £2.47 1.90% 02-Apr-20 24-Apr-20
Murray International Trust plc Quarterly 17.5p £9.41 1.90% 02-Apr-20 15-May-20
Invesco Enhanced Income Limited Quarterly 1.25p £0.68 1.80% 02-Apr-20 30-Apr-20
Henderson High Income Trust plc Quarterly 2.475p(E) £1.43 1.70% 02-Apr-20 24-Apr-20
Smiths Group plc Interim 14.6p(E) £10.16 1.40% 02-Apr-20 24-Apr-20
Lowland Investment Co plc Quarterly 16p(E) £11.20 1.40% 02-Apr-20 30-Apr-20
Fisher (James) & Sons Final 23.4p £16.42 1.40% 02-Apr-20 08-May-20
Smith & Nephew plc Final 18.353p(23.1c) £13.19 1.40% 02-Apr-20 06-May-20
Chemring Group plc Final 2.4p £1.96 1.20% 02-Apr-20 24-Apr-20
Finsbury Growth & Income Trust Plc Interim 8.5p(E) £6.95 1.20% 02-Apr-20 15-May-20
Schroder Income Growth Fund plc Quarterly 2.5p(E) £2.20 1.10% 02-Apr-20 27-Apr-20
Primary Health Prop. Quarterly 1.475p(E) £1.40 1.10% 02-Apr-20 22-May-20
Ferguson Plc. Interim 55.137p(69.4c)(E) £53.82 1.00% 02-Apr-20 28-Apr-20
Capital Partners plc Interim 17.5p £17.96 1.00% 02-Apr-20 30-Apr-20
Softcat Plc Interim 5.1p(E) £9.37 0.50% 02-Apr-20 08-May-20
F&C Investment Trust Plc Quarterly 2.97p(E) £5.77 0.50% 02-Apr-20 06-May-20

 

US close: Wall Street walloped, all eyes on Capitol Hill

Stocks on Wall Street fell sharply at the end of the week as Congressmen failed to agree on a fiscal stimulus package against the coronavirus pandemic.

By the end of trading, the Dow Jones Industrials reversed early gains to fall 4.55% to 19,173.98, alongside a 4.34% drop for the S&P 500 to 2,304.92, while the Nasdaq Composite fell 3.79% to 6,879.52.

Significantly, the US dollar spot index also reversed an early retreat, rising to 102,93, while Texas Intermediate crude oil futures.

Front month crude oil futures on the other hand were down by 11% at $22.43 a barrel on NYMEX.

To take note of, in a research note sent to clients, strategists at BofA Securities said the 2,350 point level on the S&P 500 should hold, although the risk of corporate and financial defaults remained.

“Aftershocks likely but assets with growth (tech), quality (best of breed stocks), yield (credits with fortress balance sheets) favored.”

To take note of, Friday was the quarterly expiry date for futures and options on shares and indices, or ‘quadruple withing’ day, which could make for a volatile session of trading.

Helping to put a bid into stocks nevertheless early in the session, the US central bank announced measures to quell volatility in the municipal bond market.

In parallel, Treasury Secretary, Steve Mnuchin, announced that the deadline for filing taxes would be pushed back from 15 April to 15 July, thus providing a degree of relief for cash strapped firms.

Investors were also keeping close tabs on the latest news around the pandemic, with the World Health Organisation reporting that the total number of cases globally had reached 246,275 and claimed 10,067 lives.

Closer to home, New York state Governor, Mario Cuomo, ordered that all workers remain at home, aside from those in essential services.

Back to 1975

There was some good news on the economic front, although the data was very stale.

According to the US Department of Commerce, existing home sales in jumped by 6.5% month-on-month to reach an annualised pace of 5.77m (consensus: 5.52m) – the highest since 2007.

But as Ian Shepherdson at Pantheon Macroeconomics said: “This is good news, but it’s about relevant as data from 1975.

“Before the virus, the housing market was strengthening, thanks to low rates – negative in real terms – and strong employment growth.”

 

Monday newspaper round-up: Sunak, airlines, ventilators

Pressure is mounting on Rishi Sunak to extend his coronavirus bailout to the UK’s five million self-employed people, with gig workers threatening legal action against the chancellor’s current “discriminatory” policy and a survey suggesting half would keep working if they had symptoms. On Friday, Sunak said self-employed workers could access £94.25 a week in universal credit, but he gave a far more generous deal to employees of 80% of salaries, capped at £2,500 per month. – Guardian

Airlines and airports have warned that time is running out for the government to enact promised measures to help the aviation industry, with EasyJet and Ryanair set to stop flying after Monday and less than 5% of normal passenger numbers expected at major airports. Further talks are expected between ministers and the industry on Monday as the government wrestles with how to keep critical infrastructure functioning. – Guardian

A final design of ventilator that can be rushed into mass production is ­expected to be agreed on by the ­Government and its health advisers as soon as today. Officials were set to start meetings yesterday about selecting a single ­blueprint for the life-saving machines, which are needed to treat patients ­suffering from respiratory problems caused by coronavirus. – Telegraph

The economy is expected to collapse this year as the coronavirus outbreak brings Britain to a standstill, leading economic forecasters have warned. KPMG, in its latest quarterly economic outlook, has slashed growth forecasts for the year, predicting that the pandemic could cause the UK economy to shrink by up to 5.4pc in 2020 unless public health measures were able to stem the rise in infections. – Telegraph

Britain’s top listed companies have been banned from publishing their annual results for at least the next fortnight in an unprecedented move by the City regulator to deal with the chaos caused by the coronavirus. The instruction, contained in a letter sent by the Financial Conduct Authority (FCA) to regulated companies over the weekend, immediately prompted speculation that it was the prelude to a full markets shutdown. – The Times

Short-selling positions more than tripled last week as hedge funds scoured the London market for vulnerable companies to bet against. Such activity has surged to its highest levels since records began just over seven years ago, according to analysis by The Times of official data, prompting calls for an outright ban on shorting. – The Times

 

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