FTSE 100 down 150 points before close; UK government releases guidance for businesses reopening next week

  • FTSE 100 down 150 points
  • IMF warns global GDP forecasts will be worse than expected
  • US may slap tariffs on US£1.3bn UK, EU exports

3.45pm: UK government releases guidance for businesses reopening next week

FTSE 100 plunged 150 points to 6,169 before close while sterling also worsened, dropping 0.3% to US£1.2476. Earlier on Wednesday, the government released guidance for businesses allowed to reopen as of July 4 in England, such as hairdressers, hotels, pubs and restaurants. Venues will be required to assess the capacity and allow in enough customers to respect social distancing rules, providing staggered entry or one-way systems.

JD Wetherspoon PLC (LON:JDW) shed 6% to 1,057.85p despite confirming it will reopen its pubs in England on July 4 in a short update. The FTSE 250 group added it does not currently intend to start any new development projects in the next year, though a small number of projects that were ongoing when closures were implemented will be completed. "It appears the group wants to play the wait and see game," commented David Madden, analyst at CMC Markets.

"It is possible that many of its smaller competitors will suffer more as a result of the pandemic, so Wetherspoon might be going on the acquisition trail this time next year." On Tuesday, Prime Minister Boris Johnson also relaxed the two-metre rule to 'one metre plus', which involves staying one metre apart plus mitigations which reduce the risk of transmission.

2.30pm: IMF warns pandemic hit on global economy worse than forecast

The Footsie remained 124 points lower at 6,196 as Wall Street opened in the red as expected. The Dow Jones lost 241 points to 25,914 and the S&P500 shed 22 points to 3,108.

The opening bell was preceded by a bleak report published by the International Monetary Fund (IMF), suggesting that the crisis may be worse than feared. Global GDP is expected to decline by 4.9% this year, against the 3% fall forecast announced in April. The pandemic has had a worse impact on activity in the first half of 2020 than anticipated, so the recovery will be more gradual than previously estimated.

In 2021 global growth is projected at 5.4%, well below the 11% growth calculated before COVID-19 hit. "The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s," IMF said. "Liquidity assistance is urgently needed for countries confronting health crises and external funding shortfalls, including through debt relief and financing through the global financial safety net."

"The global community must act now to avoid a repeat of this catastrophe by building global stockpiles of essential supplies and protective equipment, funding research and supporting public health systems, and putting in place effective modalities for delivering relief to the neediest."

1.45pm: Markets still shook by US-EU tariffs turmoil

The Footsie was doing slightly better after lunch, down 127 points to 6,193. Analysts fear that if the proposed US tariffs on US£3.1bn worth of European goods go ahead, prospects of recovery from the pandemic may dampen. "Investors will be hoping the EU takes a far calmer and less combative approach but who knows," commented Craig Erlam at OANDA.

"It's an election year and the President is vulnerable, they may take a far stronger approach and try to hit the administration where it hurts ahead of the November vote. It's a gamble from the White House but, again, we may see plenty of these in the coming months." The news came just a day after Donald Trump confirmed the trade deal with China was intact following a White House mishap.

Trade adviser Peter Navarro announced on Monday that the agreement was "over" in an interview. "It was at a time when they had already sent hundreds of thousands of people to this country to spread that virus, and it was just minutes after wheels up when that plane took off that we began to hear about this pandemic," he told reporters. The comment was swiftly denied the President who said the China deal was "fully intact".

12.15pm: Wall Street to open lower

The Footsie was down 139 points to 6,180 at lunchtime while Wall Street is expected to open lower.

The news on US tariffs on European exports added an extra dose of discomfort to the markets, which were already shaken by fears of a second wave of coronavirus infections in the morning. "Just as Trump seemed to momentarily put to bed the market's fears surrounding the US-China trade situation - the President tweeted that their deal was intact - a situation seems to be about to flare up between the States and Europe," said Connor Campbell at Spreadex. In the small caps, Premier Foods Plc (LON:PFD) shot up 14% to 68.2p after telling investors "Britain has got cooking again" during the lockdown, driving demand for ingredients up.

The owner of Mr Kipling expects revenues for the quarter to June to be 20% ahead of last year, topping expectations for both revenues and profit in the full year. The year to March 28 saw revenues rising 3% o GBP847mln while it swung to a GBP53mln profit before tax from the GBP42mln loss posted in 2019.

11.20am: US mulls tariffs on US£3.1bn UK and EU exports

The FTSE 100 is down more than 2%, sitting 140 points lower at 6,179 as reports emerged that the US is mulling over new tariffs on exports worth US£3.1bn from the UK, France, Germany and Spain. It would include new tariffs on products such as olives, beer, gin and trucks and increase existing ones on aircraft, leather, cheese and yoghurt among others.

Spirits producer Diageo PLC (LON:DGE) and Burberry Group PLC (LON:BRBY), which produces leather bags, both shed 3% to 2,706.82 and 1,524.5p, respectively.

More on the blog: https://t.co/H9WTji7Jmp

-- Louis Ashworth (@Louis_Ashworth) June 24, 2020

This is likely to spark a wider transatlantic trade fight later this summer, said Bloomberg reported that a notice by the US Trade Representative overnight, expected to hit European luxury brands hard. [embedded content]

10.35am: JD Sports reacquires Go Outdoors from administrators

FTSE 100 continued its descent in mid-morning, plunging 156 points to 6,163 amid worries of a second wave of infections. In the FTSE 250, JD Sports Fashion PLC (LON:JD.) dipped 2% to 628.04p after reacquiring its camping arm Go Outdoors from administrators.

The retailer announced on Tuesday evening that all its assets were taken back for GBP56mln after appointing administrators earlier in the day. At the point of administration, Go operated 67 standalone stores and a trading website, while JD stated it wants to preserve "as many jobs as possible". "The pre-pack administration gives the parent company the opportunity to renegotiate lease terms and build a more sustainable cost base for the business," Shore Capital noted.

"Taking the stores back on a 12 month licence gives JD some flexibility in their negotiations with property landlords."

9.20am: Gold touches new highs

FTSE 100 continued its descent in mid-morning while gold broke new highs. London's big caps dropped 114 points to 6,205 despite sterling was also in the red, down 0.2% to US£1.2490. Gold reached multi-year highs of above US£1,770 as US 10-year Treasury Inflation Protected Securities (TIPS) dipped to new seven-year lows at -0.66%, having declined by 0-14% in the last six days.

"Gold has also found some bid on a softening dollar in recent days, with the dollar index down 1% in the last two sessions. Fears that global central banks are fuelling a latent inflation boom with aggressive increases in the money supply continue to act as the longer-term bull thesis for gold," said Neil Wilson from Markets.com. "Whilst the Covid-19 outbreak is at first a deflationary shock to the economy, the aftermath of this crisis could be profoundly inflationary.

Gold remains the best hedge against inflation which may be about to return, even if deflationary pressures are more pronounced right now."

8.40am: Second wave collywobbles

As predicted, the FTSE 100 opened the session in negative territory as a fresh wave of coronavirus cases caused a bout of the collywobbles. The NASDAQ's ascent to a new record has also added to the sense of nervousness given the state of the real global economy, which remains in the grip of a pandemic. Ipek Ozkardeskaya, senior analyst at Swissquote Bank, provided these cautionary words: "There is a total lack of direction and little predictability across the market with one outstanding behaviour - buying the dips in equities and increasing hedges via safe-haven assets against a possibly sharp market rout.

"It is increasingly clear to everyone that most equity prices are artificially bloated." In London, the engineers were still in demand after a surprisingly strong uptick in manufacturing activity last month. Rolls Royce (LON:RR.) led the Footsie with an advance of 1.8% early on, while GKN owner Melrose Industries (LON:MRO) was up 1%.

The easing of lockdown restrictions provided some zip to Premier Inn owner Whitbread (LON:WTB), which nudged 1.4% higher.

Proactive news headlines

Tavistock Investments PLC (LON:TAVI) reported a strong performance from its protection portfolios for the first two months of its financial year. Pelatro PLC (LON:PTRO), the telecoms customer engagement software specialist, said one of its customers has expanded a business consultancy engagement to a full managed services contract. Allergy Therapeutics PLC (LON:AGY) said it expects its 2020 net profit to be "significantly above market expectations".

Futura Medical PLC (LON:FUM) said it is seeing limited impact from the coronavirus lockdown and that regulatory submissions for its erectile dysfunction treatment remain on track. Scancell Holdings PLC (LON:SCLP) has published new research in a peer-reviewed journal highlighting the potential of its Modi-1 vaccine in hard-to-treat cancers. Argo Blockchain PLC (LON:ARB) said it has expanded its cryptocurrency mining capacity with the purchase of 750 Bitmain Z11 mining units for US£474,000.

Itaconix PLC (LON:ITX) has closed what it said was an oversubscribed fundraising of at least GBP1.12mln in order to help fund the commercial development of its core products. Blue Star Capital PLC (LON:BLU) said its portfolio company, Dynasty eSports, has signed a five-year exclusive partnership agreement with the Malaysia ESports Federation (MESF). RM Secured Direct Lending PLC (LON:RMDL) said it is supporting a management buyout of energie Fitness, a low-cost gym franchisor in the UK and Ireland, led by its founder Jan Spaticchia.

Power Metal Resources PLC (LON:POW) and Red Rock Resources PLC (LON:RR.) say an upsurge in interest in the Victoria Goldfields area has prompted their joint venture to speed up development plans in the region. Union Jack Oil PLC (LON:UJO) has struck a deal to acquire an additional interests in the Biscathorpe project so that its stake increases to 30%. United Oil & Gas PLC (LON:UOG) has confirmed production growth in the Abu Sennan asset in Egypt, which yielded 13,900 barrels oil equivalent per day (boepd) in the first half of June, marking a 69% improvement of 69% compared to April's output.

Solo Oil PLC (LON:SOLO) told investors that it has delayed the release of its 2019 financial results and its AGM as the coronavirus pandemic has constrained outsourced finance functions and auditors. Amur Minerals Corporation PLC (LON:AMC) said it is on track to complete its Russian TEO feasibility study for the Kun-Manie project by the end of the year and has started planning a full bankable feasibility study (BFS). Sunrise Resources PLC (LON:SRES) said the only comments on the environmental assessment (EA) of its CS Perlite-Pozzolan Project in Nevada had been of a minor nature.

Amryt Pharma (LON:AMYT) publicly filed a registration statement with the Securities and Exchange Commission to allow trading in the US for American Depositary Shares on the Nasdaq exchange.

6.40am: Market called lower 

The FTSE 100 is expected to turn lower on Wednesday as optimism over a global economic recovery appeared to cool amid jitters over rising coronavirus cases. Spread-better IG expects the FTSE 100 to open down around 27 points after ending Tuesday's session 75 points higher at 6,320. Tuesday's positive trading came amid data showing that some parts of the world economy had bounced back somewhat from the steep decline during the lockdown, confirmation that the UK will ease its own restrictions from July 4 also helped lift the mood.

However, investors now seem to have reduced their risk appetites, potentially due to new cases of the virus in certain parts of China, the US and Germany, raising fears of a possible second wave. Hopes of a global economic recovery and clarity over the state of the US-China trade deal helped boost Wall Street overnight, with the Dow closing up 0.5% at 26,156 while the S&P 500 rose 0.43% to 3,131 and the Nasdaq notched a new record after closing 0.74% higher at 10,131. However, the optimism appeared to have faded during the trading session in Asia, with the Japanese Nikkei 225 down 0.09% while Hong Kong's Hang Seng fell 0.11%.

In the currency markets, the pound dipped 0.02% to US£1.2509 against the dollar, although the greenback had fallen back recently as investors eschewed the traditional haven asset amid the rising optimism.

Significant announcements expected for Wednesday June 24:

Trading updates: Petrofac Ltd (LON:PFC) Finals: Stagecoach Group PLC (LON:SGC), Premier Foods PLC (LON:PFD), Alpha Financial Markets Consulting PLC (LON:AFM), DiscoverIE Group PLC (LON:DSCV), HarbourVest Global Private Equity Ltd (LON:HVPE), Iomart Group PLC (LON:IOM), Savannah Energy PLC (LON:SAVE), ULS Technology PLC (LON:ULS) Interims: Crest Nicholson Holdings PLC (LON:CRST)

Around the markets:

Sterling: US£1,2509, down 0.02%

Brent crude: US£42.53 per barrel, down 0.23% Gold: US£1,770 per ounce, flat Bitcoin: US£9,644, up 0.15%

City headlines:

EasyJet is facing a group legal claim after the airline last month said the personal details of about 9 million passengers were breached by a cyber attack - Financial Times

Hotels and restaurants registered a surge in customer bookings after ministers gave vast swathes of the hospitality industry permission to reopen on 4 July - Telegraph Demand for office space in City skyscrapers will be diminished even after the coronavirus pandemic is over, with experts predicting a major shift in the commercial property market - Guardian Sharp declines in global commerce triggered by the spread of Covid-19 are "unlikely to reach the worst-case scenario" forecast earlier in the year, according to the World Trade Organisation - Times

Retailer Shoe Zone has axed 20 stores and announced job losses at its head office to slash costs - Daily Mail

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