FTSE 100 expected to retreat at open as UK inflation, Fed policy decision eyed

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  • FTSE 100 slips 2 points lower
  • UK CPI down from 1% in July to 0.2% last month
  • London’s biggest IPO of the year, the Hut Group posts a premium

9.40: Builders subside


London stocks have remained quiet and withdrawn as morning trading has gone on, with housebuilders providing a drag but oil some support.


The Footsie’s quartet of builders were under pressure from read-across from smaller Redrow as it came in short of full-year expectations.


Taylor Wimpey (LON:TW.), Barratt Developments (LON:BDEV), Berkeley Group (LON:BKG) and Persimmon (LON:PSN) were all in the red.


“Life may become a bit tricky for Redrow and its peers when the stamp duty holiday ends and eligibility for the Help to Buy scheme is narrowed next year,” said analyst at AJ Bell.


Elsewhere, Brent Crude Oil futures regained the US$40 per barrel level as hurricane outages helped provide some support to prices, in fact now up more than 2% at US$41.57.


But while Shell (LON:RDSB) was slightly higher, BP (LON:BP.) investors were unmoved, with shares in both trading not much higher than their long-time lows in March.


The FTSE 100 is virtually flat, down less than two points at 6,104.17. The pound is yo-yoing just below US$1.29.


8.50am: Smaller loss than predicted


The FTSE 100 made a quiet start to proceedings on Wednesday ahead of the US Federal Reserve’s monthly meeting and against the backdrop of some benign domestic inflation data.


The index of UK blue-chips shares opened just 3 points lower at 6,102.51.


The latter first: the ‘eat out to help out scheme’ pulled down the cost price index reading down from 1% in July to 0.2% last month, its lowest level since 2015.


“Rising coronavirus cases, the reintroduction of restrictions, negative wage growth and the prospect of half a million redundancies as the furlough scheme winds down this autumn will all play a part in keeping consumer spending subdued,” said Fidelity’s Tom Stevenson.


“Other pressing issues, like a possible collapse in the Brexit talks and consequent pressure on sterling, will overshadow any inflation worries for now,” he added.


Looking ahead to the Fed’s rate decision, due after the London close, it is likely to be ‘steady as she goes’, according to market watchers.


Richard Hunter, head of markets at Interactive Investor, said US rate-setters stood ready to “initiate further action if the economic data demands it”.


“At the same time, any forward guidance will reveal the current thinking as to how to navigate the current challenges, such as any tweaks to its position on interest rates,” he added.


On the market, London’s biggest IPO of the year got off to a solid start, with the Hut Group (LON:THG) racing to a 6.4% premium.


There were more wobbles for Rolls Royce (LON:RR.), off 3%, as the picture for international travel deteriorated. Remember, Rolls makes and maintains engines for many of the major airlines.


Among them is British Airways, owned by IAG (LON:IAG), which was down 2.6% early on.


But there was a bounce-back for B&Q owner Kingfisher (LON:KGF), up 3.2% after spending most of Tuesday in the sick bay.


Proactive news headlines:


Tiziana Life Sciences PLC (LON:TILS, NASDAQ:TLSA) expects its demerged StemPrintER business will be floated on the London Stock Exchange’s standard list late in the fourth quarter, followed potentially by a dual Nasdaq quote next year. The new, independent diagnostics business will be known as Accustem Sciences, and the spin-off will allow Tiziana to focus on its clinical portfolio. Tiziana is using dividend in specie to affect the split. This where a dividend is paid not in cash, but in assets of the company.


Sunrise Resources PLC (LON:SRES) said it has received an Air Quality Operating Permit for its CS Pozzolan-Perlite project in Nevada, the final permit required for a mine and mineral processing plant. No adverse comments or objections were received during the public comment period which ended on September 11, 2020. CS had already received a mining permit from the Federal Bureau of Land Management and a reclamation permit from the Nevada authorities.


Shield Therapeutics PLC (LON:STX), the iron deficiency treatment specialist swung strongly into profit in its first half following a US$11.4mln upfront payment from ASK Pharm, its partner in China. Revenues for the half-year to June 30, 2020, jumped to GBP8.9mln (2019: GBP430,000) with net sales in Europe of Feraccru, its flagship product, rising by 50%. Shield posted a profit for the six month period of GBP3.1mln against a loss of GBP4.2mln over the same period a year ago, while there was a cash inflow of GBP2mln that has boosted the total balance to GBP6.5mln.


KRM22 PLC (LON:KRM) has entered into a new GBP3mln convertible loan facility provided by its largest shareholder Kestrel Partners, and at the same time has confirmed stronger revenues in the first half of 2020. The interim results statement from the investment software firm included total revenue of GBP2.3mln, up from GBP1.8mln in the same period last year, with organic revenue growth at 19%. Adjusted underlying earnings (EBITDA) in the first half was marked as a GBP0.3mln loss, while the loss before tax narrowed significantly to GBP1.2mln from GBP4.4mln in 2019.


Inspiration Healthcare Group PLC (LON:IHC) has provided a final update on the status of ventilator deliveries to the UK National Health Service (NHS), saying in total it has delivered a total of approximately GBP7mln of ventilators directly in response to the coronavirus (COVID-19) pandemic. The global medical technology company said that in the past few weeks, further deliveries have been made with a value of GBP2mln taking the total value of all orders delivered by Inspiration Healthcare to approximately GBP5mln. In addition, the company said that S.L.E. Ltd, a wholly-owned subsidiary acquired in July 2020, recently completed orders of ventilators for COVID-19 for the NHS worth a total value of GBP2.1mln.


IQ-AI PLC (LON:IQAI) said its subsidiary Imaging Biometrics has announced that the Keck Medical Center of USC (University of Southern California) has purchased its IB Clinic software used for automatically generating IB’s quantitative parameter maps. The installation provides Keck Medical Center with a processing solution that allows for standardised brain tumour imaging across multiple sites and platforms for its patients. “We are excited that Keck Medical Center has adopted our brain tumour imaging platform,” Michael Schmainda, Imaging Biometrics’ chief executive said in a statement. “IB Clinic’s quantitative output is ideal for major cancer centers such as Keck Medical Center as it automates and standardises care across sites, scanners, and patients. We are equally excited for the collaborative research relationships now established between our two organisations and translating future developments that may result,” he added.


Futura Medical PLC (LON:FUM) has said it is “actively engaged” in commercial discussions about its erectile dysfunction (ED) gel ahead of a key meeting with US regulators. The company said it has hired corporate advisers to organise the interaction with potential licensing and marketing partners for MED3000. It believes there is scope for the new treatment to become an over the counter (OTC) product, tapping into a large unmet need. The progress report was provided as part of Futura’s interim results statement in which it was revealed the company had, as at June 30, 2020, cash reserves of GBP2.62mln. This is enough to see Futura through to the second quarter of 2021 under current plans.


Baker Steel Resources Trust Limited (LON:BRST) saw its net asset value (NAV) rise by 4.5% to 77.2p in the half-year to June 30, 2020. Over the period, Baker Steel sold most of its holdings in Polymetal and Ivanhoe, its two largest listed holdings, and reinvested the money in a portfolio of mining shares and some unlisted businesses. That decision helped the first-half performance, said the trust. Significant events are also possible for its largest holding, Bilboes Gold over the second half, the specialist mining investor added.


Frontier IP Group PLC (LON:FIPP) announced that its portfolio company Nandi Proteins has raised GBP720,000 via a convertible loan, including a GBP360,000 investment from the UK Government’s Future Fund. The commercialising intellectual property specialist said the investment from the Future Fund, established to support innovative businesses through the coronavirus (COVID-19) outbreak, has been matched by GBP320,000 from the group and GBP40,000 invested by Shackleton Finance, which specialises in secondary venture and development capital investments. Frontier IP holds a 20.1% stake in Nandi.


Eckoh PLC (LON:ECK) has said that given the continued resilience of its business combined with its high levels of repeat and recurring revenues, and with a further three months of trading behind it, its board has approved the payment of a special dividend of 0.61p per ordinary share. The company said its board will continue to keep its dividend policy under close review whilst the current macro-economic and coronavirus (COVID-19) uncertainty remains. Eckoh added that its financial position remains strong with net cash of GBP12.2mln as at the end of August 2020, and its management remain confident of further progress in the second half of the year.


accesso Technology Group PLC (LON:ACSO), the ticketing and virtual queuing group said trading recently has been better than expected as more venues have reopened following the coronavirus (COVID-19) lockdown. Revenue in the half-year to end June 2020 was US$24.6mln (US$50.7mln) as the company faced enforced venue closures from March onwards, though the outcome was ahead of its earlier expectations, the AIM-listed company said. Going forward, accesso noted that nearly 80% of passport and 60% of LoQueue customer venues had reopened, while it has won several new contracts in the ski sector ahead of the winter season.


TomCo Energy plc (LON:TOM) told investors it has received a Pre-FEED for the proposed Greenfield Energy LLC oil sands plant in Utah. The report, authored by Valkor subsidiary Crosstrails Engineering, set out to confirm the technical feasibility of a 10,000 barrel of oil per day operation and make first estimates of capital and operating costs. According to TomCo, the report provides a high level of confidence in the project.


NQ Minerals PLC (AQSE:NQMI) (OTCQB:NQML) (OTCQB:NQMIY), the base and precious metals producer from its Hellyer Gold Mine in Tasmania Australia, said it has raised GBP274,805 gross at 7p per share from a UK-based Institutional investor and a group of private investors for general working capital purposes and the company will issue 3,925,789 new ordinary shares under this equity issue.


ADES International Holding PLC (LON:ADES), a leading oil & gas drilling and production services provider in the Middle East and North Africa (MENA), has said it will announce its interim results for the six months ended June 30, 2020, on Tuesday, September 22, 2020. A conference call will be held the same day at 3.00pm (Egypt) 2pm (UK) 5pm (Dubai) 9am (New York). To participate in the call, investors can email: [email protected]


Belvoir Group PLC (LON:BLV), the UK’s largest property franchise, has confirmed that Dorian Gonsalves, its chief executive officer and Louise George, its chief financial officer, will present at the Shares and AJ Bell investor webinar taking place at 6.00pm BST on Thursday, September 17, 2020. A copy of the presentation given via webinar will be available to view post-event on the Reports & Presentations page of the company’s website – www.belvoirgroup.com – however, the group said, no material new information will be disclosed.


Symphony Environmental Technologies PLC (LON:SYE) has announced that its management will provide a live presentation relating to its results for the six months ended June 30, 2020, via the Investor Meet Company platform on Friday, September 18, 2020, at 11.00am. The online presentation is open to all existing and potential shareholders. Investors can sign up to Investor Meet Company for free and add to meet Symphony via: https://www.investormeetcompany.com/symphony-environmental-technologies-plc/register-investor


6.50am: Dull start predicted


The FTSE 100 index is expected to start cautiously on Wednesday following mixed performances overnight by US and Asian markets, with all eyes on the latest UK inflation data and tonight’s Federal Reserve policy decision.


Spread betting firm IG expects the blue-chip index to open around 42 points lower at 6,079, having jumped 79.29 points higher on Tuesday.


Overnight in New York, the Dow Jones Industrials Average closed just 2.27 points, or 0.01% higher at 27,995, but the broader S&P 500 index added 0.5%, and the tech-laden Nasdaq Composite gained 1.2% as the sector recovered after recent falls.


Asian markets were also mixed on Wednesday, with Japan’s Nikkei 225 index up 0.2% but Hong Kong’s Hang Seng index down 0.2% in spite of robust industrial output and retail sales data from China.


There was some concern after the World Trade Organization found on Tuesday that the United States had breached global trading rules by imposing multi-billion dollar tariffs in President Donald Trump’s trade war with China, a ruling that drew anger from Washington.


Fed rates


The US Federal Reserve will announce its latest policy decision following its two-date meeting at 7.15pm London time today.


Fed chair Jerome Powell and his fellow policymakers are on a state of high alert, according to investment analysts at AJ Bell, in case the recovery from the first-half’s recession proves weaker than expected. Powell recently said the Fed will adjust its inflation target and look for a 2% average over time – meaning that it will be happy to see an overshoot after periods when it has missed that target.


“That means the Fed is prepared to run negative real interest rates for some time – whereby its headline interest rate runs below inflation. For investors, that means their money loses purchasing power in real term and this may be one reason why some investors are piling into stock,” the AJ Bell analysts concluded.


The Fed meeting comes as US lawmakers remain at an impasse over a new stimulus package amid lingering concerns about the recovery of the world’s largest economy from the coronavirus pandemic.


The Bank of Japan and the Bank of England announce their respective policy decisions on Thursday.


Redrow hopes to build on sector optimism


On the corporate front, full-year results from Redrow PLC (LON:RDW) will come after some optimistic news from housebuilding rivals in recent weeks as the sector makes hay from the pent-up demand after the coronavirus lockdown.


Larger peer Berkeley maintained its full-year profit guidance and its shareholder returns commitments as underlying sales reservations for the past four months stood at “around 20% below the annualised run rate for last year”.


Barratt, meanwhile, reported a 46% decline in annual profits as house sales fell 29% but said it has enjoyed a boom in sales in recent weeks.


Warhammer maker Games Workshop Group PLC (LON:GAW) is due to hold its annual general meeting on Wednesday, which will likely be accompanied by an update on trading.


Investors are likely to be in a good mood already following a brief update on September 10 that said trading over the summer months was ahead of expectations and also declared a 50p dividend.


Around the Markets:


  • Sterling: US$1.2900, up 0.2%
  • Gold: US$1,956.30 an ounce, unchanged
  • Brent crude: US$41.14 a barrel, up 0.6%

6.45am: Early Markets – Asia/Australia


Stocks in the Asia-Pacific region were mixed on Wednesday as investors await the US Fed’s policy decision tonight.


In Japan, the Nikkei 225 remained flat after provisional trade statistics showed the country’s exports in August falling 14.8% as compared to a year ago.


Chinese stocks saw losses by the afternoon with the Shanghai composite declining 0.20% while Hong Kong’s Hang Seng index slipped 0.06%.


In Australia, the S&P/ASX 200 advanced 1.01% with the local tech sector leading the way following more improvements for US tech stocks overnight.


READ OUR ASX REPORT HERE


Proactive Australia news:


Zelira Therapeutics Ltd‘s (ASX:ZLD) (OTCMKTS:ZLDAF) proprietary cannabinoid medicine Zenivol(TM) can now be prescribed to patients in Australia through the Therapeutic Goods Administration’s (TGA) Special Access Scheme and via Authorised Prescribers.


Technology Metals Australia Ltd (ASX:TMT) has increased proven and probable ore reserves by 32% to 39 million tonnes at 0.9% vanadium pentoxide for the Gabanintha Vanadium Project (GVP) in Western Australia.


Pure Minerals Ltd (ASX:PM1) subsidiary Queensland Pacific Metals Pty Ltd (QPM) is making steady progress with the TECH Project aimed at establishing a value-adding metals processing facility in the Queensland city of Townsville.


Australian Vanadium Ltd (ASX:AVL) has signed a collaboration agreement for product development and vanadium pentoxide and electrolyte supply with Chinese residential vanadium redox flow battery (VRFB) producer Gui Zhou Collect Energy Century Science and Technology Co Ltd, (trading as CEC VRFB Co. Ltd).


Great Boulder Resources Ltd (ASX:GBR) has completed an oversubscribed non-renounceable entitlement offer of one share for every six shares held by eligible shareholders with applications received for shares valued at more than $1.236 million.


Cellmid Ltd (ASX:CDY) is optimistic that its revenue growth will continue in the months ahead despite the COVID-19 related disruptions on the conduct of business.


Macarthur Minerals Ltd (ASX:MIO) (CVE:MMS) (OTCQB:MMSDF) has commenced trading common shares today on the OTCQB Venture Market, a United States trading platform operated by the OTC Markets Group in New York.


Bryah Resources Ltd (ASX:BYH) has started a 5,500-metre aircore (AC) drilling program testing four gold-copper prospects within the Bryah Basin Project in Western Australia.


Core Lithium Ltd (ASX:CXO) has progressed development of the Finniss Lithium Project during 2020 as it prepares to cater for an expected surge in demand for lithium in the post-COVID economy.


Artemis Resources Ltd (ASX:ARV) (OTCMKTS:ARTTF) intends making a strategic investment in Thor Mining PLC (ASX:THR) (LON:THR) as part of that company’s capital raising of UKGBP1.065 million (~A$1.875 million).

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