FTSE 100 continues to climb; UK inflation edges down in February – Proactive Investors UK

The data mostly predates the economic shock from coronavirus, with some predicting consumer price inflation could fall to as low as 0.5% over the summer

The data mostly predates the economic shock from coronavirus, with some predicting consumer price inflation could fall to as low as 0.5% over the summer

  • FTSE 100 index up 230 points
  • UK inflation edges down in February
  • Sterling back above US$1.19

9.40am: UK inflation edges down in February
UK inflation edged down to 1.7% in February from a six-month high of 1.8% in January, according to the latest set of data.
The small downturn was helped by lower fuel prices, as well as downward pressure from video games, alcohol and tobacco products, food, furniture, household equipment and maintenance. Meanwhile, upward pressure was caused mainly by restaurant and hotel prices.
However, the data largely predates the severe economic shock caused by the coronavirus pandemic, and as a result inflation is expected to fall back sharply over the coming months.
The lockdown of the UK reinforced by consumer concern over their jobs and pay (despite support from the Government) will weigh down on demand and likely exert downward pressure on prices despite the supply side shock, said Howard Archer, chief economic advisor to the EY ITEM Club.
He added that while the drop in inflation was likely to be limited by the weakness in sterling, which last week fell to its lowest level against the dollar since 1985 at US$1.1413, consumer price inflation could get as low as 0.5% over the summer and the impact of the coronavirus on the economy began to appear.
The inflation data did seem to have provided some lift to the pound, which shortly after 9.30am was up 1.35% at US$1.1907 against the dollar.
Meanwhile, the FTSE 100 had continued to rally and was up 230 points at 5,676.
8.45am: Recovery continues
The FTSE 100 index opened comfortably in positive territory on Wednesday, basking in the afterglow of US legislators signing off a US$2 trillion coronavirus rescue package.
The index of UK blue-chips advanced 141 points to 5,587.49 early on.
The Dow Jones Industrials Average had its best day since 1933, jumping 2,100 points, while the broader-based American stocks indexes followed suit.  Asia was also a sea of green, celebrating the delayed bail-out.
Neil Wilson, senior analyst at, was a little more circumspect about the movements, particularly closer to home as traders eyed the next level for the Footsie.
As Ive noted for the last few days, there have been growing signs of stabilisation, he said. The kind of bear market bounce yesterday was rather against the narrative, but nonetheless pulls us further off the lows.
You get these kinds of mega-rallies when the market is heading lower. Therefore, as I keep saying, Id prefer to see smaller daily swings to believe that stabilisation, or even a market bottom, has been established.”
The stimulus is now by and large in place, the question is whether its enough for the markets or whether the expected spike in cases and deaths in the US and Europe, combined with the emerging picture of the economic damage, means we need to take another leg lower before the bottom is found,” he added.
There was little thematic to the buying activity early on other what looked like bargain hunting. So, budget hotelier Whitbread (LON:WTB), which Tuesday said it was shuttering its operation, rose 19%, while JD Sport (LON:JD.), a victim of the High Street shutdown, staged an 18% bounce.
The financial stocks were well bid after the markets reclaimed lost ground.
Among the small-caps, investors in Silence Therapeutics (LON:SLN) were served up some good news after AstraZeneca committed to a blockbuster collaboration deal worth US$80mln of upfront payments and investment.
It also came with a further US$400mln of milestones disbursements and royalties per treatment area.
Notionally, that could be worth up to US$1.3bn if AstraZeneca assessment drugs in heart, liver and lung disease as touted in the press release.
Unsurprisingly, the shares, which have been hot for the past year after clawing their way up from around 40p to over 400p as of Tuesdays close, shot up 24% to 505p early on.
Proactive news headlines:
Genedrive PLC (LON:GDR) shares rocketed on Wednesday as the company said a clinically validated high throughput format for its coronavirus test could be available in approximately eight weeks. In a trading update, the diagnostics firm said following discussions with suppliers it believed it could quickly ramp up production of its 96 SARS-COV-2 test, which can determine whether someone is infected with coronavirus, to over 10,000 tests per hour, making the product a material revenue generator for the company and significant contributor to addressing the global pandemic.
Silence Therapeutics PLC (LON:SLN) should see its shares rip higher on Wednesday following news it has signed a deal with drugs major AstraZeneca worth US$80mln in cash and investment upfront, plus a further US$400mln in milestone payments and royalties for each disease area targeted. Using Silences small interfering RNA, or siRNA technology, AstraZeneca is looking to initially develop treatments for liver, heart and lung diseases. siRNA has been investigated as an effective treatment for viral diseases as well as cancer, the idea being it can block, or silence disease-causing genes. In a separate release, Silence also provided a research and development update in which it confirmed it would accelerate the development of SLN360, a potential treatment for cardiovascular disease.
Gfinity PLC (LON:GFIN) has signed a deal with in-game advertising group Bidstack Group PLC (LON:BIDS) and ad tech platform Venatus Media to generate additional revenue from its websites. The esports firm said, from April 1, Bidstack and Venatus will work together to sell advertising space on its RealSport101 and Gfinityesports platforms. This will include solutions such as programmatic advertising, bespoke video and audio-based promotions and brand site takeovers, which Gfinity said will significantly increase the opportunity for additional revenue.
SIMEC Atlantis Energy Limited (LON:SAE) has been awarded a £1.545mln Scottish government grant that will help fund the subsea hub for the next phase of its tidal power array in the waters off the north coast of the country. The cash injection comes from the £10mln Saltire Tidal Energy Challenge Fund and will help deliver benefits that will be felt across the industry as the technology developed by Atlantis will be made available to other developers, the group said in a statement.
SigmaRoc PLC (LON:SRC) said it expects to report a strong performance from its businesses for the financial year ending 31 December 2019, exceeding analyst estimates. In a statement, the construction group said its revenues are expected to reach £70mln, a 71% increase on the previous year, while underlying operational profits (EBITDA) will hit £14mln, a 43% increase on the previous year.
ECSC Group PLC (LON:ECSC) said its full-year 2019, underlying earnings (EBITDA) hit breakeven as revenues surged in its managed services business. In its results for the 12 months ended 31 December, the cybersecurity specialist said the flat EBITDA figure compared to a £600,000 loss in the prior year, while revenues rose by 10% to £5.9mln. In a separate announcement, ECSC also said it has appointed Gemma Basharan and Ian Castle to the board as its chief financial officer and chief technology officer, respectively.
Ncondezi Energy Ltd (LON:NCCL) said the project financial model for the integrated Ncondezi coal-fired power plant in Tete, Mozambique, has now been finalised. Tariff submission remains on track for the first quarter of 2020, it said, with the Ncondezi power plant expected to generate 300 megawatts (MW) of electricity per year. Meanwhile, proposals to provide additional funding to cover working capital costs beyond the second quarter of 2020 are ongoing, the group added.
Bahamas Petroleum Company PLC (LON:BPC) has rescheduled its planned Perseverance-1 well to October 2020, from the previously anticipated timeline that saw the well spud in May/June. The company said the decision came as a result of the unprecedented impact of the coronavirus (Covid-19) pandemic. Given the ever-evolving adverse impact of the response to the spread of the Covid-19 virus – which is changing daily and is affecting everyone and all enterprises, around the globe – it has become clear to us that if we continue to push forward with drilling in the first half of 2020, safe and responsible operations would be compromised, Simon Potter, Bahamas’ chief executive said in a statement.
Alien Metals Ltd (LON:UFO) said it is continuing discussions with a number of potential joint venture parties with regard to its portfolio of projects in Mexico and Australia during the coronavirus (COVID-219) pandemic. In a statement, the company said it is continuing to prioritise the health and safety of its employees, and no individuals either within or associated with the company are currently suffering from coronavirus. Meanwhile, it added, work continues across the company’s operations.
Enteq Upstream PLC (LON:NTQ) said it appointed Neil Hartley as a new non-executive director. In a statement released after Tuesdays close, the company noted that Hartley brings extensive senior private equity investor and non-executive director experience. He will chair the companys remuneration and audit committees. At the same time, the group noted, Robin Pinchbeck has retired from its board. He has been a non-executive director of the company since 2011.
RM Secured Direct Lending PLC (LON:RMDL) said that, following the request by the Financial Conduct Authority (FCA) it has been compelled to defer the publication of its results for the year ended 31 December 2019, which were due for release this week. The company said it anticipates announcing its full-year results in the week commencing 6 April 2020, subject to any further guidance from the FCA and the FRC to the contrary.
Polarean Imaging PLC (LON:POLX), a clinical-stage medical imaging technology company developing a proprietary magnetic resonance imaging (MRI) drug-device combination, said that, in light of the UK Government’s latest announcements in response to the coronavirus (Covid-19) outbreak, it is no longer practical to hold its forthcoming General Meeting at the Reed Smith London office. The group added that the meeting will still proceed at 2.00pm BST, or 9am US local time, on the previously notified date of 1 April 2020 but will instead be held at the company’s offices (2500 Meridian Parkway (Suite 175), Durham, NC 27713, USA) and that only the number of shareholders required for the meeting to be quorate should physically attend. The group said its board encourages shareholders who have not already done so to submit their votes by proxy rather than attend in person.
Angling Direct PLC (LON:ANG), the UK’s largest and fastest-growing fishing tackle and equipment retailer, has announced the appointment of N+1 Singer as its nominated adviser and broker with immediate effect.
Faron Pharmaceuticals Oy (LON:FARN (NASDAQFIRSTNORTH:FARON), the clinical-stage biopharmaceutical company, said its Annual Report for the year 2019 has been published in English and its financial statements in Finnish on the company’s website.
Impax Environmental Markets PLC (LON:IEM) said it has issued 400,000 ordinary shares at a price of 250.00p each, representing a premium to the prevailing net asset value, under the company’s proposed new block listing.
6.45am: Footsie set for positive start 
The FTSE 100 is expected to open higher on Wednesday amid reports that US politicians have agreed a US$2trn stimulus bill to shore up the American economy during the coronavirus pandemic.
Spread-better IG expects the FTSE 100 to open up around 50 points after ending Tuesdays session 452 points higher at 5,446.
Coming on the heels of the central banks, there is increasing optimism that politicians are starting to understand the scale of the economic stop coming our way, as the death toll across Europe and the US continues to rise, said Michael Hewson, senior analyst at CMC Markets UK.
The hope is that the politicians on Capitol Hill deliver, given that tomorrows weekly jobless claims are likely to test market optimism quite sharply, he added.
Stimulus caused a surge on Wall Street overnight, with the Dow Jones Industrials Average ending the session up 11.37% at 20,704 while the S&P 500 rose 9.38% to 2,447 and the Nasdaq Composite climbed 8.12% to 7,417.
The optimism continued in Asia earlier today, with Japan’s Nikkei 225 rising 8% while Hong Kongs Hang Seng climbed 3.1%.
On currency markets, the pound was 0.66% higher at US$1.1826 against the dollar this morning, however, UK inflation data due later today could provide some catalysts for movement as investors gauge the health of the economy with the country headed into coronavirus pendemic lockdown.
Significant announcements that had been expected for Wednesday:
Trading announcements:Diploma PLC (LON:DPLM), United Utilities Group PLC (LON:UU.)
Finals:Moss Bros Group PLC (LON:MOSB), Ted Baker plc (LON:TED), Ergomed PLC (LON:ERGO), CloudCall Group PLC (LON:CALL), DP Eurasia NV (LON:DPEU), SDL Plc (LON:SDL), SpaceandPeople PLC (LON:SAL)
Interims:Bellway PLC (LON:BWY), Ricardo PLC (LON:RCDO), Applied Graphene Materials PLC (LON:AGM)
Economic data: UK inflation, UK PPI
Around the markets:

  • Sterling: US$1.1826, up 0.66%
  • Brent crude: US$30.48 a barrel, up 2.49%
  • Gold: US$1,617.24 an ounce, down 2.59%
  • Bitcoin: US$6,690, up 1.78%

City headlines:

  • The government would not be able to save all businesses in the weeks ahead, Rishi Sunak told MPs as the UK chancellor comes under growing pressure to announce a rescue scheme for self-employed Financial Times
  • The UK is on course for a recession of a scale ‘not seen in modern history’ as the coronavirus outbreak has already dealt the economy an initial blow even greater than that seen during the last financial crisis Daily Mail
  • Warning signs and vulnerabilities that emerged during the 2008 financial crisis are piling up amid coronavirus-related panic among investors, experts have warned Telegraph
  • Grocers and online retailers have launched big hiring sprees to cope with a surge in demand as the industry booms during the coronavirus FT
  • Americas blue-chip stock market index Dow Jones enjoyed its best day since 1933 yesterday as US lawmakers neared agreement on a $2 trillion coronavirus rescue package Times

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