FTSE 100 fades amid lockdown worries; Next leads the index after resilient showing

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The FTSE 100 opened lower as it looked increasingly likely the UK was headed towards some sort of limited lockdown to ward off a coronavirus second wave.

The prospect of further national restrictions came amid howls protest from all sectors at the apparent failure of wholesale testing and sparked worries over the economic impact of moves to flatten the infection curve.

After hours Wednesday, the US Federal Reserve received what the Financial Times called mixed reviews for its vow to keep monetary policy loose while attempting to spell out what ‘loose’ meant in reality.

“The move did reinforce the Fed’s dovishness,” said the FT.

“But some economists and investors doubted whether the more specific guidance would be effective in achieving the central bank’s ambitious economic objectives, leaving it under pressure to deploy other more aggressive tools to help the recovery.”

Meanwhile, Bank of England governor Andrew Bailey and fellow members of the Monetary Policy Committee look set to stand pat on the base rate, which is sitting at a historic low of 0.1%.

The powder is expected to remain dry on further stimulus efforts, which are expected to be deployed later this year when the Treasury’s furlough scheme comes to an end.

Elsewhere, the partial climbdown from Boris Johnson on the controversial Internal Market Bill failed to calm nerves.

On the Footsie, HSBC (LON:HSBA) was led the losers as it tracked the Asian markets on which it is focused lower. The shares opened 3% down.

Next (LON:NXT) led the blue-chip index with a 2.2% gain after the retailer proved resilient to the current carnage on the High Street.

“The pace of change enforced by the lockdown towards online sales was one which Next was ready to embrace,” said Richard Hunter, head of markets at Interactive Investor.

“Its online presence had long been a cornerstone of its success, and where customers continued to shop – inevitably on a lower scale – the business was quickly ramped up to meet demand.

“In addition, with much of its store portfolio based out of town, the more recent tentative return to physical shopping has also played into Next’s hands.”

The current market volatility appears to have been good news for the spread betting firm IG Group, which topped the FTSE 250 with a 6.2% rise in the wake of first-quarter results.

6.50am: Weak start for Footsie

The FTSE 100 is set to start on the back foot on Thursday ahead of the latest Bank of England policy meeting, which comes after the US Federal Reserve issued its latest policy decision last night.

CFD and spreadbetting firm IG Markets sees the blue-chip benchmark falling by around 39 points, making the price 6,040 to 6,043 with just over an hour to go before the open.

“There has been a lot of chatter in recent months about the likelihood of whether the Bank of England would go down the negative rate route, to the extent that it has become rather tedious, and a little predictable,” said Michael Hewson, analyst at CMC Markets.

“While Bank of England officials have been careful not to rule out the possibility of such a move the reality is that any such move would be extremely damaging to the UK financial sector which makes up such an important part of the UK economy.

“At least the US Federal Reserve has implicitly ruled out the prospect of such a move, perhaps mindful of the damage it has done in Europe and Japan,” he added.

The Federal Reserve surprised nobody last night, as the US central bank made no changes to policy. It did, however, guide that it intends to keep interest rates low until 2023 – a clear signal that rates will remain supportive in the short and medium-term.

In New York, the Dow Jones Industrial Average finished Wednesday in positive territory adding 36 points or 0.13% at 28,032. But the S&P 500 index dropped 0.46% closing at 3,385 and the Nasdaq Composite shed 1.25% to 11,050.

There was volatility for America’s big-name tech stocks as Facebook found itself in the sights of federal regulators. The social network will reportedly come under the scrutiny of an antitrust investigation by the Federal Trade Commission. Google may also be put under the microscope.

Asian stock indices were also lower. Japan’s Nikkei 225 index lost 140 points or 0.6% trading at 23,334 whilst Hong Kong’s Hang Seng fell 367 points or 1.49% to 24,357. The Shanghai Composite was down 0.69% at 3,261.

Around the markets:

  • The pound: US$1.2931, down 0.28%
  • Gold price: US$1,943 per ounce, down 0.77%
  • Silver price: US$26.84 per ounce, down 1.19%
  • Brent crude: US$41.72 per barrel, up 2.9%
  • WTI crude: US$39.61, up 3.4%
  • Bitcoin: US$10,917, up 1.09%

6.45am: Early Markets – Asia/Australia

Stocks in Asia-Pacific markets were lower on Thursday as investors reacted to overnight developments from the US Federal Reserve.

Hong Kong’s Hang Seng index led losses with a 1.47% fall and China’s Shanghai Composite was down 0.85%.

South Korea’s Kospi slipped 1.42%, while Japan’s Nikkei 225 was down 0.64%.

In Australia, the S&P/ASX 200 was 1.06% lower even as the country’s unemployment rate dropped to 6.8% in August, an improvement from 7.5% in the previous month.


Proactive Australia news:

Blackstone Minerals Ltd (ASX:BSX) has completed its placement raising $17.82 million before costs to support ongoing exploration, resource drilling and future studies at the Ta Khoa Project in Vietnam.

Orthocell Ltd (ASX:OCC) has had the positive pre-clinical and clinical results for the use of CelGro(R) in enhancing repair of critical bone defects published in the highly regarded Tissue Engineering journal.

Predictive Discovery Ltd (ASX:PDI) is strengthening its landholding within the prolific Siguiri Basin in Guinea with the acquisition of Argo exploration permit and granting of the Bokoro exploration permit.

Mako Gold Ltd (ASX:MKG) has extended gold mineralisation 250 metres along strike at Tchaga prospect within the Napie Gold Project in Cote d’Ivoire where reverse circulation and diamond drilling is ongoing.

Carnarvon Petroleum Limited’s (ASX:CVN) interpretation of new 3D seismic data has provided a higher level of confidence over the Apus, Petrus and Kepler targets near the Dorado discovery within the Bedout sub-basin on Western Australia’s North West Shelf.

Highfield Resources Ltd (ASX:HFR) has been granted administrative authorisation for construction of key sections of the high voltage electrical supply line needed to build its Muga Potash Mine in Spain.

Auroch Minerals Ltd (ASX:AOU) is leveraged to the expected nickel super-cycle with Australia’s nickel export earnings forecast to strengthen on the back of growing export volumes and recovering prices.

GTI Resources Ltd (ASX:GTR) is moving fast towards its maiden gold drilling at Niagara Gold Project, southwest of Kookynie in Western Australia, with the company on track for September and October drilling.

Emerald Clinics Ltd (ASX:EMD) has entered a professional services agreement with the Precision Recovery team at New York’s Mt Sinai Hospital, one of the USA’s leading teaching and research hospitals, to support ongoing development of Emerald’s Openly clinical service.

Fe Limited (ASX:FEL) is extending its exposure to an iron ore industry that is performing strongly with positive fundamentals for future growth, through acquiring a 51% interest in the Mining Rights Agreement for a production-ready WA project.

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