• FTSE 100 up 52 points
  • US markets expected to open higher
  • UK inflation unexpectedly hits six month high

1.15pm: Wall Street to head higher amid slowdown in coronavirus infections

US markets are expected to open on the front foot on Wednesday as investor risk appetite returns amid a slowdown in coronavirus infections.

Traders appear to have been encouraged by reports that the Chinese government will help companies identify weak links in their supply chains as a result of the outbreak, potentially reducing the economic fallout of the epidemic.

China is also reportedly looking to a number of strategies to help domestic businesses recover, including temporary tax cuts and rent reductions for businesses in affected regions.

“Investors still appear encouraged by the apparent deceleration in the number of new coronavirus cases, despite the death toll in China having surpassed 2,000. The problem is that they may be able to see the light at the end of the tunnel but it’s still not clear how long the tunnel is or what the world outside will look like”, said OANDA’s Craig Erlam.

“I guess the damage is less important than the knowledge that the central banks stand ready to throw money at the problem. In such an environment, it’s no wonder everything is a dip buying opportunity”, he added.

The FTSE 100 was 52 points higher at 7,434 at around 1.15pm.

12.00pm: FTSE 100 holds on to gains; Campaigners warn cash could disappear in a decade

As midday approached the FTSE 100 had managed to hold on to its gains from this morning’s session and was 59 points higher at 7,440 at 11.55am.

Markets appear to have been boosted by receding fears around the coronavirus outbreak as the rate of new infections slows and Chinese factories slowly begin reopening their doors to workers.

“It was announced that more than 80% of Chinese state-controlled firms are back in business, but some dealers question the numbers. Traders are clutching onto whatever small bits of positive news they can grab”, said David Madden at CMC Markets.

The index also seems to be shrugging off any pressure from sterling, which despite an initial boost from the higher than expected UK inflation reading for January was down 0.16% at US$1.2978 against the dollar heading into lunchtime.

While the inflation data may provide something for new Chancellor of the Exchequer Rishi Sunak to chew on ahead of his Budget on 11 March, campaigners are warning that the fate of the UK’s coins and banknotes should also be top of the list.

The Access to Cash Review, led by former Financial Ombudsman boss Natalie Ceeney, is asking the government to introduce rules in the Budget to protect access to physical money, according to media reports, saying that the proliferation of cashless payment methods could exclude millions of UK consumers.

The Review added that while it had previously expected the UK to become virtually cashless by 2035, it now estimates that this could occur by 2030.

10.30am: Inflation ‘unlikely to faze Bank of England

The higher than expected rate of inflation for Janaury is unlikely to cause any turbulence at the Bank of England (BoE), according to analysts at ING.

The Dutch bank said that they expected the central bank to “keep rates on hold this year” as the uptick in price growth was not expected to last as 2020 progressed.

“Sharp cuts to water bills, as well as a lower regulated energy cap, should become a fairly noticeable drag on inflation”, ING said, adding that the BoE would be unlikely to reconsider its stance unless there was a “more significant decline in economic activity”.

Despite the increase in inflation, UK economic growth is still lagging behind past performances, with Stuart Law, chief executive of peer-to-peer marketplace lender Assetz Capital, saying there was “a very real chance” of a technical rescession in the first half of 2020 due to the coronavirus outbreak.

He added that if the slowdown continued the BoE may be forced to “follow central banks around the world by offering negative interest rates”.

The FTSE 100 was 56 points higher at 7,438 shortly before 10.30am.

9.45am: UK inflation comes in ahead of forecasts

Inflation in the UK in January was at 1.8%, slightly above expectations of 1.6% and above the previous month’s reading of 1.3%.

The figure is the fastest rate of growth in six months, boosted by higher prices at petrol station pumps as well as a slower decline in airfares compared to a year ago.

Energy and gas prices had remained unchanged in the period but had fallen in the prior year following the introduction of the energy price cap.

Mike Hardie, head of inflation at the Office for National Statistics (ONS), added that annual house prices had risen across all regions of the UK for the first time in nearly two years.

Meanwhile, core inflation, which excludes energy, fuel, alcohol and tobacco, rose to 1.6% from 1.4% in December.

“Inflation is ticking upwards, driven by greater consumer confidence, but does remain below target. However, despite this greater economic optimism, the UK is not yet out of the Brexit fog and the Dec 31st cliff-edge is only getting closer”, said Robert Alster, head of investment services at Close Brothers Asset Management.

“The Bank of England will be trepidatious about bold monetary decisions until the scale of this post-EU disruption is known. A similar approach is expected to be taken by the new Chancellor on March 11th. Rishi Sunak is likely to use the Budget to announce a welcome boost to longer-term investment, but abide by the fiscal rules for shorter term spending until the fog has cleared – an approach which has received the support of the currency markets”, he added.

The pound was 0.17% higher at US$1.3023 against the dollar shortly after the data release, while the FTSE 100 was up 50 points at 7,432 at around 9.45am.

–Adds commentary–

8.35am: Footsie bobs higher

The FTSE 100 index, as expected, opened higher on Wednesday, rising 45 points to 7,427 in the first half-hour of trading.

Taking the early top spots among the blue chips were housebuilder Berkeley Group Holdings PLC (LON:BKG), which rose 3.1% at 5,530 in early deals, followed by British Gas owner Centrica PLC (LON:CNA), up 2.2% to 75.2p, and Russian steel maker Evraz PLC (LON:EVR) which was lifted 1.8% at 383.8p.

An early faller, meanwhile, was Holiday Inn owner Intercontinental Hotels Group PLC (LON:IHG), which was 1% lower at 4,878.5p, having posted modest gains following results on Tuesday.

WATCH: Morning Report: Crispin Odey wades into Sirius Minerals takeover battle

Outside of the big hitters, the Sirius Minerals PLC (LON:SXX) saga took another turn this morning when hedge fund manager Odey Asset Management said a takeover offer for the potash miner from Anglo American plc (LON:AAL) “does not represent fair value for shareholders” and that they believed the mining firm “would be willing to bid substantially more” than Anglo’s current GBP400mln bid, which is due to be voted on by shareholders early next month. (Read more on the Sirius/Odey story here.)

Proactive news headlines:

Chaarat Gold Holdings Limited (LON:CGH) said it remains on track for first production from its Tulkubash mine in the Kyrgyz Republic late next year as it updated on the performance of its operation in Armenia. The Kapan deposit yielded 60,252 gold equivalent ounces last year, up 7%, at an all-in cost of US$1,040 an ounce, down from US$1,183 a year earlier. Turning to Tulkubash, the company said project funding discussions have now moved to the “due diligence and documentation phase with a leading sector project finance group in the region”.

BigDish PLC (LON:DISH), a food technology company that operates a yield management platform for restaurants, said it was informed on 18 February 2020 that two directors made purchases of shares in the company on 17 and 18 February 2020. It noted that Monza Capital Ventures Limited, an entity connected to founder and executive director, Aidan Bishop purchased 2,000,000 ordinary shares at a price of 3.6p, taking his holding to 51,298,506 shares, representing 14.70% of the company’s issued share capital. The group added that Simon Perree, a non-executive director of the company, acquired 270,000 ordinary shares at a price of 3.4% each taking his holding to 853,905 shares, representing 0.25% of the issued share capital.

Tower Resources PLC (LON:TRP) told investors it wants to drill the hotly anticipated NJOM-3 well in June. Offshore Cameroon the company has just completed a well site survey and equipment is now being sourced for the planned drill programme.

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (OTCMKTS:WHELF) has signed a binding term-sheet for the sale of premium water-soluble sulphate of potash (SOP) from its Lake Way Project in Western Australia. The company is currently developing the project, which a bankable feasibility study (BFS) released last year valued at $696 million pre-tax.

SkinBioTherapeutics PLC (LON:SKIN) is teaming up with a Dutch firm called Winclove Probiotics to develop a food supplement to combat psoriasis. The former will identify the good bacteria strains for testing, while the latter will formulate and manufacture the new product, which will be called AxisBiotix.

Sunrise Resources PLC (LON:SRES) cut losses in its latest full-year results as its hailed “significant progress” in the development of its CS Pozzolan-Perlite project in Nevada, USA. For the year ended 30 September, the firm reported a loss of GBP301,738, lower than the GBP786,672 figure in the prior year, while it had also ended the year GBP27,069 in cash, although since then it has raised GBP200,000 in a share placing.

Avation PLC (LON:AVAP) said two of its ATR 72-600 aircraft have been subleased to Scottish carrier Loganair and will begin flying in the coming weeks. The two aircraft have been subleased from Flybe and will remain with Loganair until just before the end of the leases.

Echo Energy PLC (LON:ECHO) told investors that the Campo La Mata Exploration well (CLM x-1) in the Tapi Aike licence, in Argentina, has made a non-commercial gas discovery. The well’s primary target (Lobe C) and secondary target (Anita) both contained gas but did not flow at sufficient rates in testing to be considered commercially viable.

APQ Global Limited (LON:APQ), an emerging markets growth company incorporated in Guernsey, has announced that as at the close of business on 31 January 2020, its unaudited book value per ordinary share was 89.04 US cents, equivalent to 67.55p. The group said the figure includes the accrual for the 1.5p dividend (2.0 US cent equivalent) declared on 23 January 2020 and payable on the 2 March 2020.

AFC Energy (LON:AFC), a leading provider of hydrogen power generation technologies, said it has been invited to present at the Scottish Renewables Transport Conference 2020 in Glasgow on Wednesday alongside several of Scotland’s leading environmental and energy commentators. The presentation, titled “Hydrogen: Fueling the Growth in Battery Electric Vehicles” will focus on the company’s H-PowerTM EV charger solution and how it can support Scotland deliver on its commitments to deliver Net Zero across the transportation sector, utilising green hydrogen as its key fuel.

6.45am: Firm start predicted

The FTSE 100 index is expected to open higher on Wednesday as traders fears around the potential impact of the coronavirus ease seem to once again.

Spread-better IG expects the UK blue-chip index to start around 56 points higher after ending Tuesday’s session down 51 points at 7,382.

Positivity seems to have returned to the markets following Tuesday’s worries that the coronavirus outbreak will stunt economic growth in the start of 2020, after a warning from tech titan Apple Inc (NASDAQ:AAPL), with investors now seeming to view the slowdown as temporary before a rebound later in the year.

“The optimism, while well-founded, given how resilient markets have been to previous shocks, is predicated on the ability of central banks, as well as governments to deliver on market expectations that they can cushion any downside of what, to all intents and purposes is a force of nature, as opposed to an economic crisis”, said Michael Hewson, chief market analyst at CMC Markets.

However, Hewson added that traditional methods of central bank support “may be more difficult to sustain” when confronted with a pandemic.

Fears over the virus outbreak’s effect on global supply chains drove US markets to a mixed finish overnight, with the Dow Jones Industrial Average closing 0.56% lower at 29,232 while the S&P 500 fell 0.29% to 3,370. The Nasdaq, however, ended the session slightly higher, rising 0.02% to 9,732.

Asian markets were more positive on Wednesday as some optimism returned, lifted by better than feared Japanese export data, with the Nikkei 225 up 0.89% while Hong Kong’s Hang Seng rose 0.28%.

On currency markets, the pound was 0.03% lower at US$1.2994 against the dollar, although UK inflation data due later today could provide some catalyst for movement in cable.

Significant announcements expected for Wednesday:

Finals: Hochschild Mining Plc (LON:HOC), RPS Group PLC (LON:RPS)

Economic data: UK CPI, RIP, PPI HPI inflation; UK construction output; US housing starts; US PPI; US FOMC minutes

Around the markets:

  • Sterling: US$1.2994, down 0.03%
  • Brent crude: US$58.17 a barrel, up 0.73%
  • Gold: US$1,603.78 an ounce, up 0.23%
  • Bitcoin: US$10,130.44, up 3.4%

City headlines:

  • Glencore’s billionaire chief Ivan Glasenberg has dismissed BP’s plan to cut its greenhouse gas emissions to net-zero by 2050 as “wishy-washy” – Financial Times
  • Jaguar Land Rover is to shut down production at its UK car plants in 15 days as coronavirus wreaks havoc with its supply chain – Telegraph
  • BHP’S new boss is pinning the miner’s expansion on metals needed for eco-friendly technology amid growing pressure to go green – Daily Mail
  • Michel Barnier has turned down British demands for a Canada-style trade deal that would free the UK from EU rules – Guardian
  • Spain’s government has approved a digital services tax, after a similar move by France that prompted threats of retaliation from the US – Guardian

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