UK stocks started the week in uncertain mood while gold prices touched an all-time high of $1,991 per ounce as investors weighed continued weakness in the US dollar and a collapse in real US bond yields.
The dollar, which has lost 10% of its value against global currencies since the start of the pandemic, has come to reflect growing concern over the unchecked spread of the virus in the US and the potential for lasting damage to the economy.
The FTSE 100 index of leading stocks dipped 0.35% from Friday’s close to 5,877 points as strength in precious metals producers Fresnillo (FRES) and Polymetal (POLY) was countered by weakness in banks and aerospace stocks.
Surprisingly, housebuilders traded lower after a government minister said he would overhaul the UK’s ‘outdated and cumbersome’ planning regulations this week to deliver a ‘faster, people-based system to deliver the homes we need.’
Shares in Barratt Developments (BDEV) lost 1.3% to 504p while Taylor Wimpey (TW.) shares dropped 2.2% to a three-month low of 116p.
HSBC DISAPPOINTS
In company news, mega-bank HSBC (HSBA) missed estimates for first half earnings and raised its estimate of full year loan loss provisions to between $8 billion and $13 billion, sending shares down 4.6% to 326p.
Pre-tax profits fell 65% to $4.32 billion against forecasts of $5.67 billion due to charges for expected credit losses of $6.9bn, including a $1.2 billion software write-down, while lower income at its retail banking and commercial banking units offset better earnings at the investment bank.
Insurer Hiscox (HSX) reported a 4% fall in first half premiums to $2.235 billion as strength in its retail business helped offset lower volumes in its reinsurance division as the firm ‘kept its powder dry’ in anticipation of an improvement in market conditions.
The firm took $232 million of provisions for Covid-related claims including $150 million for cancelled events in the media, entertainment and travel sectors. Shares fell 5.5% to 737p in response to the update.
Aerospace firm Senior (SNR) posted a first half operating loss as it took a $135 million charge for goodwill write-downs and ‘other adjusting items’. The firm said the coronavirus pandemic has had ‘a profound effect’ on its customers in the civil aerospace market, while the grounding of the Boeing 737 MAX fleet also impacted its results.
Aerospace sales were 31% lower in the first half due to a 41% fall in civil aerospace orders while the Flexonics metal bellows and thermal components business saw a 27% drop in sales. The firm warned that the outlook for Flexonics had worsened in the second quarter due to weakness in the land vehicle and oil and gas markets. Shares fell 9.4% to 47.3p.
SMALL-CAP MOVERS
Foreign exchange firm Argentex (AGFX:AIM) delivered a 32% increase in full year revenues to £28.9 million thanks to a 12% increase in foreign exchange turnover to £12.1 billion.
The firm added 380 new corporate clients during the year while the number of corporate customers trading currencies ‘actively‘ rose by 12% to more than 1,200.
Despite the uncertain economic outlook, the company is positive on its growth prospects thanks to its technology edge, which includes a new online trading platform launched in March. However, shares fell 5.3% reflecting the gloomy overall mood.
Music royalty company Hipgnosis (SONG) announced that it had agreed to acquire the catalogue of Barry Manilow, one of the best-selling artists of all time, sending its shares gently higher to 118p.
Over the last 50 years the singer has released 40 albums, of which 29 have been certified platinum, as well as producing albums for other artists and for films.
London-based estate agency Winkworth (WINK) posted an update on the property market, saying it had seen a ‘significant recovery in sales interest’ since the Chancellor eased the stamp duty threshold to £500,000 last month. On the day of the announcement itself, traffic on the firm’s website hit its highest ever level. Investors bid the shares up 3.2% to 145p.
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