|Day's Range||6,137.09 - 6,262.71|
|52 Week Range||4,898.80 - 7,727.50|
The blue-chip FTSE 100 <.FTSE> slid 1.3%, with BP Plc <BP.L> and Royal Dutch Shell Plc <RDSa.L> among the biggest drags, as the new infections raised the spectre of further lockdowns and hit oil prices. The domestically-focussed FTSE 250 <.FTMC> fell 0.4% on the day, but still held onto a weekly gain. "Stocks enjoyed a big rally yesterday on the back of the optimism about a possible COVID-19 vaccine but all of the gains the FTSE 100 made yesterday have been lost today on renewed health fears," said David Madden, market analyst at CMC Markets UK.
The blue-chip FTSE 100 <.FTSE> rose 1.3% and the mid-cap FTSE 250 <.FTMC> 1% as a COVID-19 vaccine from Pfizer <PFE.N> and Germany's BioNTech <BNTX.O> was found to be well tolerated in early-stage human trials. Appetite for global equities heightened after data showed record employment growth in the United States at 4.8 million job additions, even as layoffs remained elevated and COVID-19 cases across the country spiked.
A COVID-19 vaccine developed by Pfizer Inc <PFE.N> and German biotech firm BioNTech <BNTX.O> showed promise and was found to be well tolerated in early-stage human trials. "The turning point appeared to be some vaccine news, an element of the pandemic saga that has been missing from the last couple of weeks," said Connor Campbell, a financial analyst at Spreadex. The domestically focussed FTSE 250 <.FTMC> was up 0.4% after closing Tuesday with its best quarter in eight years, partly on the back of historic global monetary and fiscal stimulus.
European stock markets traded mostly higher Wednesday, as some better-than-expected economic data indicated that the economic recovery in Europe is on track, despite lingering concerns about the Covid-19 outbreak both at home and, more acutely, in the U.S. It was cautious about the outlook for the rest of the year, but said it had repaid 500 million pounds that it had drawn down from a credit facility as a precautionary measure at the start of the outbreak.
The blue-chip FTSE 100 <.FTSE> closed 0.9% lower, weighed down by a 4% decline in Royal Dutch Shell Plc <RDSa.L> after it said it planned to write down the value of its assets by up to $22 billion on a lower outlook for oil and gas prices. Gross domestic product dropped by a quarterly 2.2% between January and March, while Prime Minister Boris Johnson in a speech on Tuesday, promised to fast-track 5 billion pounds ($6.15 billion) of infrastructure investment to steer the economy out of the downturn. "In the current climate the UK economy can do with all the help it can get, but the sum of money in question is very small in the grand scheme of things," said David Madden, market analyst at CMC Markets UK.
Boris Johnson focuses on infrastructure spending in an effort to revitalize the UK economy. Yahoo Finance’s Tom Belger discusses.
The blue-chip FTSE 100 <.FTSE> closed 1.3% higher after falling as much as 0.6%, while the British mid-cap index <.FTMC> rose 0.7%. Oil & gas stocks <.FTNMX0530> jumped 2.1%, with heavyweight BP <BP.L> gaining 3.3% as it agreed to sell its global petrochemicals business to billionaire Jim Ratcliffe's Ineos for $5 billion. UK stocks have staged a strong rebound in the past three months following a coronavirus-driven crash in March, and are on track for one of their best quarters since the global financial crisis, boosted in part by historic global stimulus.
Pidgley, 72, helped set up the FTSE 100 company in 1976 and became Berkeley's chairman over a decade ago. Deputy Chairman Barker joined the company as a non-executive director in 2012 after having worked with one of the "Big Four" accounting firms, PricewaterhouseCoopers for more than 30 years. Shares of Berkeley, which operates mainly in London, Birmingham and the South of England, closed down 3.8% at 4,105 pence on Friday.
London's blue-chip FTSE 100 <.FTSE> closed up 0.2% but a defensive rally showed evidence of investor worry. British American Tobacco <BATS.L>, Reckit Benckiser <RB.L>, Unilever <ULVR.L> and Tesco <TSCO.L> were among the biggest boosts.
The euro zone is "probably past" the worst of the economic crisis caused by the coronavirus pandemic, European Central Bank President Christine Lagarde said on Friday, while urging authorities to prepare for a possible second wave. "We probably are past the lowest point and I say that with some trepidation because of course there could be a severe second wave," Lagarde told an online event. The U.S., the world’s economic driver, has posted a record number of new coronavirus cases, with state health departments reporting a total of over 37,000 new cases on Thursday.
(Bloomberg) -- U.K. equities have underperformed every year since the 2016 referendum, and have been a consensus underweight among money managers. Just as the long-shunned market was starting to recover from years of political instability and uncertainty over ties with the European Union, the coronavirus pandemic has left the country facing its worst recession in 300 years.As the lockdown gradually eases, with English pubs, restaurants and cinemas set to reopen in July, clarity on negotiations with the EU before the end of the transition agreement in December may revive investor interest in a market that’s trading near historically cheap levels.The FTSE 100 Index has lagged behind major indexes over the past four years, and in local currency terms is trading near levels it was at just before the vote four years ago. In dollar terms, its underperformance is even more striking, with a nearly 20% drop.A tentative market recovery following Boris Johnson’s decisive electoral victory has been hampered by the lockdowns in the country that’s among the worst hit by Covid-19. A collapse in oil prices has also dragged on the megacap FTSE 100, given the almost 12% weight of energy stocks in the index.Years of underperformance have pushed U.K. stocks’ discount to global equities to an extreme, one of the reasons the U.K. is the most preferred equity market in UBS Wealth Management’s asset allocation. The manager sees an improvement in earnings revisions on the back of higher oil prices, while noting the recent underperformance.“The U.K. market should benefit from a rotation out of defensive growth stocks into value names, given its large exposure to value sectors such as basic materials, energy, and banks, which account for a combined 40% of the FTSE 100,” UBS WM strategist Claudia Panseri wrote in a note last week.The exposure could be a double-edged sword. While the U.K. is traditionally seen as a high-dividend market, the pandemic’s impact has resulted in heavyweights including Royal Dutch Shell Plc cutting payouts.British equities were downgraded to underweight last week by Citigroup Inc. strategists, who said the market’s dividend base remained highly concentrated, with over a quarter of the payouts coming from the “at-risk” energy sector.The U.K. remains the most unloved region for fund managers, according to Bank of America Corp.’s June fund manager survey, which showed a net 29% as underweight. That said, allocation to U.K. equities increased by 4 percentage points this month, the survey showed, while staying well below the long-term average.Positioning on the U.K. market could also largely depend on sterling moves, which are likely to be driven by the Brexit outcome. Rising risks of no deal could add pressure on the currency. And while the FTSE 100 has long moved in opposition to the pound, the two asset classes are currently experiencing their longest period of positive correlation since 2014.Credit Suisse strategist Andrew Garthwaite, who expects the British currency to reach $1.29 by the end of the year, upgraded U.K. small caps to overweight on Wednesday. The strategist sees falling credit spreads and fiscal stimulus also supportive, while small caps’ strong exposure to industrial and consumer cyclicals make them the preferred play when the Purchasing Manager Index is rising.“The FTSE small cap index versus FTSE 100 looks unusually cheap, despite its recent de-rating,” Garthwaite wrote in a note, adding that U.K. small caps have significantly stronger earnings revisions than large caps, which is not reflected in the prices.The base case for Goldman Sachs Group Inc. economists is that the EU and the U.K. will strike a “thin” free trade agreement by the end of the year.The deadline for an extension request is at the end of June, and the government already stated it will not ask for another delay. That leaves until Nov. 26 to reach an agreement with the EU in a manner that will leave enough time to ratify a deal before the end of the transition period on Dec. 30.While the EU is leading the fiscal stimulus effort, the U.K. has also been active and more could be on the cards, especially after investors expressed concerns over the Bank of England’s slowdown in asset purchases. Signs of economic recovery have also materialized after manufacturing and services data on Tuesday beat expectations, and the Citi Economic Surprise Index bounced.(Update with Credit Suisse view on small caps, Sterling paras 11-12)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Matt Patsky confronts corporations on everything from their carbon footprints to the diversity of their workforces. But now, in the wake of racial unrest sweeping America, Patsky is having a reckoning of his own.“I get a ‘D’ on diversity,” says Patsky, whose $3 billion Trillium Asset Management pressed investors to divest from South Africa during its anti-apartheid struggles. Just 10% of his 44 employees come from minority backgrounds -- a number that he said warrants a “C” relative to the broader financial industry. “We have to start walking the talk and make the same changes we’re asking companies to make.”White people make up about 80% of employees in socially responsible investment firms, according to a January 2019 study published by industry consultants and financial advisers about racial disparities in the workforce. Black people account for just 7% of employees among the firms that were surveyed.Even the largest groups that represent socially responsible investors are behind the curve. A cursory look at the website of the United Nations-backed Principles for Responsible Investment, the world’s biggest industry body for social investing, shows few Black employees. The website for the Forum for Sustainable and Responsible Investment shows a staff that’s comprised mainly of White people. Its board has four people from minority backgrounds.The lack of Black people and other minorities may explain why the world of ESG has fallen short on pushing corporations on race.“I am the first to admit that we aren’t where we want to be,” says Fiona Reynolds, chief executive officer of the London-based PRI, which represents about 3,000 firms that together oversee more than $100 trillion for clients. About 22% of PRI’s staff is comprised of minorities, including Black and Asian people. “We’re urging the global financial-services community to join us at the PRI in recommitting to make these issues our top priority.”In PRI’s network of ESG investors -- those who consider environmental, social and governance issues alongside financial metrics -- few have a track record of pushing companies to do better on race. Before George Floyd, an unarmed Black man, was killed on May 25 by a White Minneapolis police officer, racial equality was largely absent from the discussion.BlackRock Inc., the world’s largest asset manager, committed Monday to increase its Black workforce by 30% by 2024. The New York-based firm also will double the proportion of senior leaders who are Black from the current 3% level, CEO Larry Fink wrote in a blog post.“We need to do better,” Fink wrote.Calvert Research and Management, another of America’s biggest socially responsible investment firms, plans to put racial equality at the top of the list for shareholder resolutions in 2021, as this year’s proxy season is already concluding.ESG has shown it can be a force for good. Through a mixture of carrot and stick tactics, involving everything from lobbying to voting against directors and even divestment, ESG investors have helped persuade a growing number of companies to disclose their carbon footprints, with some even pledging to dramatically reduce their emissions.Responsible investors also have helped advance gender equality in the workplace by pressing companies to add women to their boards and senior management teams, says Mirza Baig, global head of governance at Aviva Investors in London.“We have made considerable progress on gender equality, but I think that has to some extent been at the detriment of the same level of razor focus on issues to do with ethnicity and class,” Baig says.Kimberley Lewis, who works for Federated Hermes’s stewardship and engagement unit EOS in London, agrees, saying the view among ESG investors that tackling obstacles to gender diversity will naturally pave the way for greater racial equality has yet to be proven.A U.K. report published earlier this year by businessman Sir John Parker, EY and the government found that at least 31 companies in the FTSE 100 have zero board members from ethnic minorities. The report concluded that it “will be challenging” to meet a goal of having at least one director from an ethnic minority background on the boards of all FTSE 100 companies by 2021.Patsky says Trillium, which was bought earlier this year by Australia’s Perpetual Ltd., is rarely asked about its own diversity and inclusion policies even as it continuously questions publicly listed corporations. To make up for lost ground, Patsky says his firm will be more aggressive in hiring minorities. Trillium recently recruited Lisa Hayles, who is Black, from Boston Common Asset Management to work with institutional clients.Patsky said he plans to convey, both internally and externally, how Trillium recruits using the so-called Rooney rule, which requires the inclusion of a diverse slate of candidates for a given role.According to the study by financial advisers and consultants, Black people account for 22% of firms’ workforce and boards that are run by people of color, and just 4% for the firms that are led by Whites, said the study, which looked at almost 700 employees, including board members, at 15 U.S.-based mutual fund groups.Sonya Dreizler, one of the report’s authors, said she doesn’t buy the argument that the lack of diversity in corporate America is down to a “pipeline problem” -- a line often espoused by executives to explain why their workforces are mainly White.“It’s a network problem,” said Dreizler, who runs the Solutions with Sonya consulting firm in San Francisco. “People mainly hire through their networks, and if your network is made up of white guys who you golf with, then you’re highly restricted.”Parnassus Investments, which manages some of the U.S.’s biggest ESG-focused funds, is working on plans to “support topics related to racial diversity and inclusion,” Chief Marketing Officer Joe Sinha wrote in an email, adding that the head of the firm’s ESG group, Iyassu Essayas, is Black.At Domini Impact Investments, whose founder Amy Domini is a pioneer of responsible investing, the company said it’s seeking to boost the diversity of its personnel. About 4% of Domini’s 26 employees are Black and about one-fifth are non-White.(Adds Trillium’s push against apartheid in second paragraph and details about how it recruits staff in the 17th.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
When the UK voted to leave the European Union in June 2016, rushing into the exporter-heavy FTSE 100 stocks index for a currency hedge and international exposure made sense for investors alarmed by a falling pound and dire economic forecasts. Little did they know that the lightly regulated, UK-focused Alternative Investment Market (AIM) would prove to be a much better investment in the following four years, with a 34% gain. Its constituents were prone to wilder moves than within its midcap peer, the FTSE 250 index, or the blue-chip FTSE 100.
As Wall Street tumbled, broad-based losses saw the blue-chip FTSE 100 <.FTSE> close down 3.1% and the domestically focused FTSE 250 <.FTMC> drop 2.8% with financial, energy, consumer stocks among the biggest drags. The International Monetary Fund slashed its 2020 global output forecasts further on Wednesday saying the coronavirus pandemic is causing wider and deeper damage to economic activity than first thought. AJ Bell investment director Russ Mould said that while the economic impact of potential measures to contain local flare-ups would be less than shutting down an entire economy, "a recovery of this nature is a messier story for investors to digest and this could act as a drag on equities".
European stock markets weakened Wednesday, with investors fretting about the increasing number of coronavirus cases worldwide amid fears this will lead to the reintroduction of generalized lockdown measures. German Health Minister Jens Spahn on Wednesday stressed that the coronavirus remains a risk after the western German state of North Rhine-Westphalia on Tuesday put two municipalities back into lockdown following an outbreak at a meatpacking plant.
The blue-chip FTSE 100 <.FTSE> closed up 1.2%, boosted by financial, energy and mining stocks. The mid-cap FTSE 250 <.FTMC> ended 0.5% higher, but cut some session gains as home builders weighed. The moves were in-line with global markets which cheered confirmation that the U.S.-China trade pact was "fully intact", after earlier confusing statements from the White House.
The blue-chip FTSE 100 <.FTSE> lost 0.8% while the mid-cap FTSE 250 <.FTMC> slipped 0.6% for its worst drop in over a week. London shares of Glencore <GLEN.L> touched a three-week low after Switzerland opened a criminal probe against the miner over allegations it had failed to have measures in place to prevent corruption in the Democratic Republic of Congo. Topping the FTSE 250, outsourcing group Capita Plc <CPI.L> jumped 13.2% on a deal to sell its legal process software product.
(Bloomberg Opinion) -- Many of the world’s leading investors are concerned that the recent gains in the U.S. stock market are overdone, given the uncertain economic outlook and the risks of a second wave of the Covid-19 virus. But American equities are in very good company.Investing in U.S. stocks is “simply playing with fire,” Jeremy Grantham, whose firm GMO oversees about $60 billion, told CNBC on Wednesday. Ray Dalio’s Bridgewater Associates warned last week that a decline in U.S. corporate profit margins could lead to a “lost decade” for equity investors. And in a June 18 note, Howard Marks of Oaktree Capital Management LP wrote, “The potential for further gains from things turning out better than expected or valuations continuing to expand doesn’t fully compensate for the risk of decline.” No wonder the world is increasingly talking about bubbles.The 40% rally in the benchmark S&P 500 index, since it reached a low for the year on March 23, is “the fastest in this time ever,” Grantham said, as well as the only one in history “that takes place against a background of undeniable economic problems.” Nobel Prize-winning economist Paul Krugman wrote in the New York Times about what he deemed “market madness in the pandemic.”And yet the gains in the past three months aren’t restricted to U.S. stocks. Instead, they are mirrored in broader equity indexes. Even those that don’t have the benefit of a Microsoft Corp. (which has a 5.74% weighting in the S&P and is up 44% since U.S. stocks bottomed), an Apple Inc. (5.69% weighting, up 57%), an Amazon.com Inc. (4.3% of the index, 40% gain) or a Facebook Inc. (2.19% weight, up 60%) have recovered.The gains in Japanese stocks have matched those of the U.S., driven in large part by companies in sectors including machinery, marine transport and oil and gas — “an awful lot of dull, dirty, cyclical stuff,” as Jonathan Allum, a London-based strategist at SMBC Nikko Securities Inc., put it in a recent research report.Even regional European benchmark indexes, including the U.K. FTSE 100, Germany’s DAX index and France’s CAC 40 index, have staged rallies similar in size to the S&P 500’s. In fact, if you compare the price gains since the S&P reached its nadir for the year, Germany’s market index has even outpaced its U.S. counterpart.All of which suggests that the recent blaming of the U.S. market renaissance on so-called Robinhood Bros — U.S. day traders seeking to replicate the thrill of sports betting by gambling instead on stocks — misses the broader picture. There’s been a widespread comeback in equities across the geographical board. Moreover, it’s not just stocks that have come roaring back. In the debt markets, yields on non-government bonds have dropped precipitously, after spiking higher as the pandemic started to trash the global economy. For companies borrowing in dollars in the fixed-income market, money has never been cheaper, with the yield on the benchmark index covering $6.5 trillion of bonds declining to a record low in recent days, as the Federal Reserve began buying corporate debt as part of its quantitative easing program.Skeptics of the rally in financial assets can point to the real and present danger that a resurgence of virus infections, and further lockdowns, would stymie an economic rebound. There’s also the potential for shockwaves surrounding the forthcoming U.S. election.But more agnostic observers see the markets looking further ahead and weighing the massive intervention of central banks as the prime determinant of the outlook for equities. “While news headlines can make us think the second-wave and election stories are the biggest drivers for markets, it is the Fed story that will endure over the medium term,” Mark Haefele, the chief investment officer at UBS AG’s global wealth management unit, wrote last week.It seems that as long as the world’s central banks are willing to continue their prime-pumping efforts to stop the global economy from falling off a cliff, investors everywhere are happy to maintain their faith in the value of financial assets. Only time will tell whether they’ll be rewarded for their market piety.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a big week ahead, with June’s prelim PMIs due out. We can expect COVID-19 and stimulus to also influence. Dire PMIs it will get choppy.
Prudential reached a reinsurance deal to sell its $500 million stake in U.S. business Jackson to a leading retirement services company Athene Holding.
EU leaders are set to discuss later Friday, via video conference, the European Commission's plan to borrow 750 billion euros against the EU budget, in order to fund a recovery fund for the region. “We still think the frugal four will eventually bend in compromise, but with some compromises with budget rebates etc,” said Danske Bank, in a research note.
Bank of England has raised its bond-buying program in response to the country’s economic slump. Yahoo Finance’s Tom Belger discusses.
Most London-listed companies that transferred pension obligations to insurance companies saw their share prices rise by up to 3% more than sector peers in the six months after completing the deals, a report showed on Wednesday. Two-thirds of the more than 70 firms which transferred part or all of their defined benefit pension schemes to an insurer since 2007 saw a share price lift afterwards, the report by consultants Mercer said. Pension payments in a defined benefit scheme are based on an employee's final salary before retirement.