ADVFN Morning London Market Report: Tuesday 12 January 2021

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London open: Stocks little changed as investor mull retail sales


London stocks were little changed in early trade on Tuesday amid ongoing concerns about the Covid-19 pandemic and the potential for tighter restrictions, as investors digested dire UK retail sales figures.

At 0900 GMT, the FTSE 100 was steady at 6,796.55.

Spreadex analyst Connor Campbell said: “It was another quiet start on Tuesday – though as we saw on Monday, that doesn’t mean the markets won’t end the session deep in the red.”

He said the FTSE’s energy was being “sapped by the continued speculation that even tighter lockdown restrictions might be on their way in the UK, and Rishi Sunak’s warning that the economy is going to ‘get worse before it gets better’”.

Market participants were also mulling over industry research showing that UK retail sales slumped to a record low in 2020, after the high street saw little festive cheer in December.

According to the latest BRC-KPMG retail sales monitor, total sales increased 1.8% in December. That was an improvement on December 2019’s 0.2% uptick, and above the 12-month average decline. But it was below the three-month average of growth of 2.5%.

On a like-for-like basis, sales rose 4.8% year-on-year.

The weak December contributed to a 0.3% decline in total sales in 2020, the lowest since records began in 1995. Food sales rose by 5.4%, but non-food was down 5.0%.

Paul Martin, UK head of retail at KPMG, said: “In the most important month of the year for the retail industry, there was some positive growth due to the ongoing shift of expenditure from other categories, such as travel and leisure.

“Household retailed and food item purchases were top of Christmas shopping lists, with historic growth rates in contrast to fashion accessories and beauty products, which experienced double-digit declines.

“Further restrictions and the closure of many non-essential shops resulted in a dismal December performance for those retailers on the high street, and conditions will be continue to be challenging as we enter another national lockdown.”

In equity marketsAvast was the top performer on the FTSE 100 after an initiation at ‘buy’ at Berenberg.

B&Q owner Kingfisher rallied after saying it expected current year profits to be at the top end of forecasts as fourth quarter like-for-like sales rose 16.9%, driven by people purchasing online. Current sell-side analyst expectations for full-year adjusted profit before tax is £667m to £742m, according to company-compiled consensus estimates at January 4.

Playtech advanced as the FTSE 250 gambling software company said its FY 2020 performance was set to be ahead of consensus expectations, with its financials division, Finalto, the standout performer.

Housebuilder Vistry was on the front foot after saying it would resume dividend payments as it guided for full-year profits at the upper end of forecasts.

On the downside, miniature wargames manufacturer Games Workshop slumped even as it reported a better first-half performance than it had been expecting, as the group continues to benefit from Covid-19 restrictions and lockdowns.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Kingfisher Plc +3.01% +8.40 287.90
2 International Consolidated Airlines Group S.a. +1.57% +2.40 155.25
3 British Land Company Plc +1.50% +6.80 458.80
4 Lloyds Banking Group Plc +1.47% +0.53 36.70
5 Next Plc +1.34% +102.00 7,706.00
6 Hsbc Holdings Plc +1.29% +5.25 413.45
7 Standard Life Aberdeen Plc +1.27% +3.80 302.00
8 Glencore Plc +1.22% +3.30 273.85
9 Compass Group Plc +1.21% +17.00 1,427.00
10 Rolls-royce Holdings Plc +1.18% +1.25 107.00


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Carnival Plc -2.26% -29.00 1,254.00
2 Micro Focus International Plc -1.69% -6.70 390.30
3 Reckitt Benckiser Group Plc -1.46% -96.00 6,460.00
4 Spirax-sarco Engineering Plc -1.42% -165.00 11,475.00
5 Astrazeneca Plc -1.39% -105.00 7,451.00
6 Croda International Plc -1.27% -84.00 6,538.00
7 Tui Ag -1.17% -4.10 346.50
8 Intertek Group Plc -1.15% -66.00 5,656.00
9 Relx Plc -1.15% -21.50 1,846.50
10 Pearson Plc -1.09% -7.40 669.60


Europe open: Shares bounce back on US stimulus hopes

European shares started Tuesday in positive form, rebounding from Monday’s session as upbeat corporate news and US stimulus hopes drove sentiment.

The Stoxx 600 index was up 0.4%. Germany’s DAX rose 0.37% and London’s FTSE a modest 0.14% as the UK government warned of a bumpy ride ahead for the domestic economy and tougher enforcement of coronavirus restrictions.

US futures were slightly higher after falls overnight on Wall Street.

“Equities sold off yesterday as last week’s bullish mood was swapped for a more cautious attitude. There was an absence of positive news yesterday so the stories about the health crisis were at the centre of attention,” said CMC Markets analyst David Madden.

“The Chinese authorises announced the country registered its highest daily rise in coronavirus cases in five months. China has held up relatively well in terms of the health emergency so the resurfacing of the crisis rippled through the markets. Germany, France and the UK continue to endure high case numbers too”

Madden said Monday’s fall “needs to be put in the context of the large gains that were posted last week”.

“In recent sessions, the speculation that President-elect Joe Biden will map out new stimulus plans has dominated the headlines. Also the vaccine news is assisting the upbeat sentiment. Stocks on both sides of the Atlantic fell yesterday, but traders haven’t lost sight of the Biden and vaccination roll-out stories,” he added.

In corporate news, shares in house builder Vistry gained 3% as the company said it would resume dividend payments and full-year profits would be at the upper end of expectations.

European DIY group Kingfisher saw its shares rise as the DIY boom continued during renewed lockdowns. The owner of B&Q in the UK and Brico Depot in France said it expected current year profits to be at the top end of forecasts as fourth quarter like-for-like sales rose 16.9%, driven by people purchasing online amid tightening coronavirus restrictions.

BPRoyal Dutch Shell and Total gained as crude prices rose on expectations of a drawdown in the US oil stockpile.

Danish shipping company Maersk rose 2.8% after an upgrade to ‘€œbuy” from broker Berenberg, saying earnings momentum driven by freight prices could see the stock run higher.


Tuesday newspaper round-up: THG boss, truckers, Jaeger

A year ago Matthew Moulding – undoubtedly one of the business names of 2020 – was perhaps best known for founding a controversial VAT-free online sales operation for Tesco, Asda, WH Smith, Dixons and Best Buy. Until 2011, he based certain operations in the Channel Islands to take advantage of European tax rules that exempt imports below £18 from VAT, until the loophole was closed by the then chancellor, George Osborne, in his budget of that year. – Guardian

The UK has been accused of failing to honour its promise to curb shipments of plastic waste to developing countries, after it emerged Britain’s new post-Brexit regulations are less stringent than those imposed by the EU. From 1 January, shipments of unsorted plastic waste from the EU to non-OECD countries were banned. But Britain will continue to allow plastic waste to be exported to developing countries, despite a Tory party manifesto commitment to banning the practice, and promises of no regression of environmental standards post-Brexit. – Guardian

Foreign truckers bringing freight to Britain have raised their prices by almost 700pc over fears of getting stranded in the UK or not being able to secure loads for the return journey. Hauliers who previously charged €1.50 per kilometre now want €10 because of the impact of new Brexit customs controls, according to the Road Haulage Association. – Telegraph

Marks & Spencer has bought Jaeger after the upmarket fashion brand’s collapse in the autumn. The retailer is expected to buy only Jaeger’s intellectual property, which would allow it to sell Jaeger-branded goods on its website as a third-party brand. M&S did not disclose the amount paid, but it is understood to be about £5 million. – The Times


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