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FTSE 100 breaches 7,400 Despite Soft Retail Sales Data




FTSE 100 breaches 7,400 Despite Soft Retail Sales Data

The FTSE 100 has stealthily risen above 7,400. The CBI’s Distributive Trades Survey was weak but not as bad as feared.

  • FTSE 100 index gains 70 points
  • CBI’s distributive trades survey for November saw the sales balance fall to a five-month low of -25% in November from -23% in October.
  • “The CBI’s survey almost certainly understates the impact that November’s lockdown has had on retail sales,” suggested Samuel Tombs at Pantheon Macroeconomics

12.10pm: Lockdown hits UK retail sales but not as hard as last time

CBI’s distributive trades survey for November saw the sales balance fall to a five-month low of -25% in November from -23% in October.

The balance is calculated by subtracting the percentage of retailers reporting a decline in sales from the percentage reporting an increase. The consensus forecast was for a reading of -35.

The CBI survey is believed to have taken place over the period October 27 – November 16 and includes the national lockdown, which came into effect on November 5.

“The CBI’s survey almost certainly understates the impact that November’s lockdown has had on retail sales,” suggested Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“Only around half the survey likely covered the period since November 5, when non-essential shops were forced to close. In addition, Google Mobility data indicate that the number of people visiting retail locations surged briefly in the days immediately before the second lockdown began. Admittedly, many non-essential shops have stayed open for “click and collect” sales and will have improved their online offerings. Even so, data from Springboard show that retail footfall was down 58% year-over-year in the week to November 14, far worse than the 32% drop recorded in the week to October 31.” Tombs noted.

“Many people likely are postponing purchases of durable goods until December, when shops will reopen and people can test products once again. For now, then, we still expect retail sales volumes to fall by about 10% month-to-month in November, before jumping by 15% and setting a new record high in December,” Tombs said.

Howard Archer, the chief economic advisor to the EY ITEM Club, said the numbers were weak but at least they were not as bad as they were in April, when the first lockdown took place.

“The CBI’s sales balance reached a five-month low of -25% in November from -23% in October and an 18-month high of +11% in September. The balance had previously reached -55% in April from -3% in March,” Archer reported.

“Sales volumes were considered to be below average for the time of the year to the greatest degree since June.

“Online sales rose at the fastest rate since October 2018 as consumers could not visit non-essential retailers.

“Significantly, retailers were cautious about sales prospects in the key month of December. A balance of -2% expected retail sales volumes to be up year-on-year in December,” Archer added.

The FTSE 100 was unperturbed, edging a bit higher to 6,606, up 70 points (1.1%).

11.15am: Bitcoin steals the show

London’s blue-chip equities have posted decent gains this morning but have had their thunder stolen by Bitcoin, which is now trading at around US$19,000.

The FTSE 100 index was up 65 points (1.0%) at 6,399, helped by the continued strength of oil stocks.

“The oil market has for a long time been shrouded with fog, with predictability extremely difficult with respect to both the timing and magnitude of an oil demand rebound. This fog has now been lifted and blown away. We now know that we’ll be able to control Covid-19 and move past it, and this has removed a huge amount of uncertainty in markets. The Joe Biden-transition has also now started. In the short-term, this is good for markets in general as well as for the oil market,” declared Bjarne Schieldrop, the chief commodities analyst at the Nordic corporate bank, SEB.

“On a 5-10 year horizon, the Biden administration is bad news for oil. It will help to accelerate the green energy transition as well as the electrification of transportation, and that is the bad news for oil on a longer-term perspective.

“Nonetheless, an oil demand rebound in 2021 is now a certainty, and markets are not waiting to price it in,” he added.

Over in the mystifying world of cryptocurrencies, Bitcoin briefly topped US$19,000 this morning for the first time since 2017 before subsiding to US$18,952, up 2.9% on the day.

“Accurately predicting an end of year price for bitcoin is pointless, it could just as easily be $50,000 as $15,000. We’ve seen what this can do before and the difference now, compared to last time it was at these levels, is that it only feels like the beginning. The hype isn’t yet what is was, a break to new highs could bring that and we know what that means. Buckle up, it’s going to be quite the ride,” said Craig Erlam at Oanda.

9.45am: The Footsie shrugs off sterling’s gains

Despite sterling gaining half a cent against the greenback, London’s blue-chips – including several big dollar-earners – have made a promising start to the day.

The FTSE 100 was up 47 points (0.7%) at 6,378, with two of yesterday’s better performers – Rolls-Royce Holdings PLC (LON:RR.) and BP PLC (LON:BP.) – topping the class this morning with rises of 7.7% and 6.0% respectively.

Contract caterer Compass Group PLC (LON:CPG) was 3.8% heavier at 1,394p after full-year results were not as unpalatable as analysts had feared.

“Compass’s prelims this morning were slightly better than expected, with a small Q4 sales and margin beat. The profit margin guidance for Q1-21 of +2.5% (Q4: +0.6%) was reassuringly positive,” noted Amish Chohan, an equity research analyst at Quilter Cheviot.

Going the other way was water utility Pennon Group PLC (LON:PNN), which slipped 2.1% to 983.4p after its half-year results.

“Pennon is performing well against its targets and looks to be coping well with its new, tougher regulatory price regime. Dividends are more complex. With no income coming from Viridor any longer, the group’s dividend to shareholders represents the payment from South West Water alone. This is increased in line with the group’s policy of growing dividends by CPIH +2% each year but without the Viridor contribution, the actual cash paid to shareholders falls from 13.66p to 6.77p per share,” explained Steve Clayton, a fund manager at Hargreaves Lansdown.

During the pandemic, pet ownership has apparently soared and with it the share price of Pets at Home Group PLC (LON:PET) but the pet products retailer and veterinary services provider ran into profit-taking today after its interims left an unwanted deposit on the welcome mat.

Revenue surged 5.1% from a year earlier but coincidentally underlying profit before tas declined by the same percentage.

“Pets at Home is benefiting from a rise in pet ownership during lockdown and a growing trend of pet food premiumisation. This means a growth in pet accessories as well as increased demand for higher-margin pet foods. The retailer’s online sales are now nudging close to 20% penetration,” observed Ross Hindle, an analyst at Third Bridge.

“Collectively this means Pets at Home is expected to outperform the market, with margin expansion aided by a strong private label offering. The big questions are, how much did social distancing and other safety measures impact margins and how sustainable will their success be in 2021?”

8.50am: Footsie gets a shot in the arm

The FTSE 100 index pushed higher in early trade on Tuesday with what appeared to be something of a delayed reaction to the Oxford University/AstraZeneca vaccine update Monday.

London’s blue-chip index opened 54 points higher at 6,387.71.

Markets in Asia and here in Europe have taken 24 hours for the new vaccine news to sink in.

Perhaps it was the way the data was presented, or that traders simply overlooked the fact that the UK team has come up with a cheap, mass inoculation that can easily be manufactured and stored.

Instead, they appeared, initially at least, to have focused on the nuance around the efficacy of the AstraZeneca drug and jabs developed by Pfizer/BioNTech and Moderna.

Whatever the reason, positivity finally seemed contagious.

US political uncertainty is also beginning to ebb with Donald Trump seemingly willing to start the presidential transition.

Here in the UK, crunch talks are taking place with the devolved administrations of Wales, Scotland and Northern Ireland to determine how restrictions will be lifted to allow families to see each other over Christmas.

On the market, coronavirus bounce-back stocks Rolls Royce (LON:RR.) and IAG (LON:IAG) were up 7% and 4% respectively. In the second-tier, travel firms TUI (LON:TUI), up 10%, and Carnival (LON:CCL), ahead 6%, got in on the act too.

A return to profit for caterer Compass Group (LON:CPG) prompted a 4% bump to the share price.

The morning’s big faller was online white goods retailer AO World (LON:AO.), which succumbed to a bout of profit-taking in the wake of what on the face of it was a robust set of interims. Down 6% on this morning, AO stock has strode from a pre-pandemic low of 50p to almost 400p.

As Richard Hunter, head of markets at Interactive Investor, points out: “Companies suffering from the impact of the pandemic are easy to find, particularly in the retail space. On the other hand, for those reaping extreme benefits, it is unnecessary to look any further than AO World.

“Comfortably the best performer in the FTSE 350, the shares have risen by an extraordinary 365% in the year to date. Bulls of the stock will also be heartened to hear that the company believes the growth in online purchases, particularly for its major domestic appliances, represents a permanent shift in consumer habits.”

Proactive news headlines:

Zoetic International PLC (LON:ZOE) said it has signed a landmark agreement with the Asian America Trade Association (AATAC) that will bring its Chill brand of cannabidiol (CBD) products to tens of thousands of retail stores across the US. AATAC is one of the largest trade associations in the US and represents a majority of the nation’s 154,000 convenience stores. The CBD specialist said the deal will facilitate its introduction and recommendation of its products to over 88,000 AATAC partners which will pave the way for Chill products to be sold from “eye-catching new point of sale display stands at high footfall convenience stores, gas stations and corner stores” in all US states.

Bezant Resources PLC (LON:BZT) has confirmed copper mineralisation in the first two holes of its drill programme at the Hope copper-gold Project in Namibia. Both holes encountered the targeted copper zone, with a 6-metre zone of indicated copper mineralisation logged in hole GOD002 from 172 metres (m) to 178m depth Drill core samples will be sent for assay, to evaluate for copper, gold and other associated minerals, it added.

Block Energy PLC (LON:BLOE) told investors it has now completed the acquisition of Schlumberger Rustaveli Company Limited (SRCL), securing the transformational licences for Georgian onshore blocks IX and XI. The deal significantly increasing production and provides several development and exploration opportunities that the company plans to advance in the coming months. It will now start to integrate the assets and operations along with a cost reduction plan to ensure the new assets are operated efficiently.

Tharisa PLC (LON:THS) said it is expected to boost earnings per share by 300% in upcoming results for the 12 months to end September 2020, due to be released shortly. The increase comes following operational improvements on all measured metrics at the company’s South African chrome and platinum operations, as announced in October. The company has also benefited from higher platinum group metals prices, as production shortfalls elsewhere in South Africa have constricted supply.

Capital Limited (LON:CAPD) has announced the expansion of its operations at Barrick Gold Corporation’s Bulyanhulu Gold Mine in Tanzania with the award of two new contracts. The leading mining services company, which is focused on the African markets, said the contracts include a five-year laboratory services contract for MSALABS, together with a two-year underground grade control drilling contract.

Gore Street Energy Storage Fund PLC (LON:GSF)  has switched on, or energised its Drumkee project, which at 50Mw installed capacity is the largest in Northern Ireland. A second 50Mw project in Northern Ireland, Mullavilly, is expected to be switched on in December. Both Drumkee and Mullavilly are scheduled to be commissioned and become fully operational in the first quarter of 2021, which will increase Gore Street’s total installed operational portfolio to 210Mw.

Eckoh PLC (LON:ECK) said it expects its full-year profits will be on a par with the previous year, despite the coronavirus pandemic. The provider of secure payment products and customer contact solutions added the caveat in its half-year report that its full-year performance could still yet be affected by further extended lockdowns in the UK or the US. Adjusted underlying earnings (EBITDA) in the six months to the end of September 2020 were £4.20mln, versus £4.22mln in the same period of the previous year.

Sativa Wellness Group Inc (LON:SWEL) has hailed a ruling from the European Court of Justice (ECJ) which it said “opens the door for high quality, compliant [cannabidiol] companies to operate in markets across the EU”. The Aquis-listed firm, which distributes and sells CBD products throughout the UK and EU, welcomed the ECJ ruling that CBD is not classified as a narcotic drug and that a French ban on hemp-derived CBD contradicts EU law. Sativa also said its product range is on track to meet a March 2021 submission deadline for the UK Food Standard’s Agency’s (FSA’s) Novel Foods accreditation, which it said should now be “an easy transition” to the European FSA Novel Foods accreditation.

Eco Atlantic Oil & Gas Ltd (LON:ECO) has said it remains well placed to capitalise on its strategic acreage in prolific hydrocarbon provinces as it reported its half-year results, The explorer is preparing for its next well in Guyana, expected in the second half of 2021. The envisaged well programme is fully funded. Alongside partner Tullow Oil, the company is presently assessing options to drill at least two exploration wells in the light oil cretaceous targets as soon as practical.

Keywords Studios PLC (LON:KWS) said it has raised its full-year expectations as a result of continued strong trading in the second half of the year. The provider of services to the computer games industry said it expects full-year adjusted profit before tax will be significantly ahead of the current market consensus. Revenue for 2020 is expected to be in line with market expectations of €367mln, up from €326.5mln, reflecting robust demand for the group’s services despite previously stated coronavirus (COVID-19) production constraints.

Bushveld Minerals Ltd (LON:BMN) produced 31% more vanadium in the third quarter of 2020 than the second, due to the lifting of the nationwide coronavirus lockdown in South Africa. More significantly, vanadium production was 37% higher across the nine months to end September 2020 than it was in the corresponding period a year ago, as the Vanchem processing assets were included for the full period. Vanadium sales were also higher. The company raised US$35mln in early November to help with expansion.

FastForward Innovations Limited (LON:FFWD) said its portfolio firm Yooma Corp, in which it holds a 10.65% interest, will launch a range of cannabidiol (CBD) beauty brands into the Chinese market. The AIM-listed investment firm noted an update from Yooma in which the hemp and CBD social commerce wellness group said it will launch its MĀSK Skincare and Lab to Beauty Brands on BorderX Lab’s China cross-border eCommerce app, Beyond.

Braveheart Investment Group PLC (LON:BRH) said it has raised £17.42mln from the sale of its holdings in Remote Monitored Systems PLC (LON:RMS). The investment company received shares in Remote Monitored Systems (RMS) as consideration for the sale of its stake in corp nutrition specialist, Pharm2Farm. The intention initially was to hold the shares but some were sold to meet a funding requirement for one of Braveheart’s portfolio companies, Paraytec, while the rest were subsequently sold, as announced by Braveheart on November 18.  In the last month, the price of RMS has risen from 0.875p to around 2.64p.

InnovaDerma PLC (LON:IDP) has announced that subject to shareholder approval, Simon Pyper will become a non-executive director of the company at the conclusion of its general meeting to be held on December 16, 2020, at 10.00am. The developer of beauty, personal care and life science products, said that Rodney Turner who has been a non-executive director of the group since September 2014 has chosen not to stand for re-election and will be stepping down from the board from the beginning of the general meeting. The company pointed out that Pyper has strong experience as an executive director of public companies and brings with him digital and marketing expertise, being formerly chief executive officer and chief financial officer of digital marketing group Be Heard Group PLC.

Open Orphan PLC (LON:ORPH), the contract research specialist, has appointed a new non-executive director. Elaine Sullivan will replace the departing Mark Warne as an independent member of the board. Currently chief executive Curadh Pharmaceuticals, she brings with her big company experience, having held senior R&D posts at Lilly and AstraZeneca, as well as an “in-depth background and knowledge” of virology.

Alien Metals Ltd (LON:UFO), a minerals exploration and development company, has announced the retirement of James Cable as a non-executive director of the company, effective on Tuesday. Commenting on the retirement, Alien’s chairman Dan Smith said: “James has been involved with the Company since its inception and has been a great resource to myself and the Board.  We wish James well in his future endeavours.”

Nuformix PLC (LON:NFX) a drug re-purposing specialist has announced the appointment of Dr Julian Gilbert as a non-executive director of the company with immediate effect. The company noted that Gilbert has more than 30 years of commercial and technical experience in the pharmaceutical industry gained at a number of companies including Chiroscience PLC, Mundipharma International Limited, British Technology Group PLC (BTG) and Smith Kline & French (now GlaxoSmithKline PLC). Most recently, he was co-founder and CEO of Acacia Pharma Group PLC raising around £100mln in private and public funding and leading its flotation on Euronext in 2018. Prior to Acacia, he was co-founder and commercial director of Arakis Limited which was sold to Sosei in 2005 for £107mln. Dr Chris Blackwell, Nuformix executive chairman, commented: “It’s a pleasure for us to welcome Julian to the Board. Julian’s knowledge and experience will be extremely valuable as the Company moves forward with its near-term strategic priorities focussed on business development and licensing opportunities.” The group said its board is also undertaking a search for an additional independent non-executive director with recent and relevant financial experience.

 Anglo Asian Mining PLC (LON:AAZ) said it is set to produce between 68,000 and 72,000 ounces of gold equivalent in the year to December 2020 from its operations in Azerbaijan. The number is lower than initial expectations, as a number of engineering staff were conscripted to participate in the recent conflict with Armenia. However, Anglo Asian noted that it is still on track to achieve sales of over US$100mln.

ReNeuron Group PLC (LON:RENE) is raising up to £15mln, which will be invested in an expanded study on its treatment for a degenerative eye disease and to deliver proof-of-concept data from its exosome collaborations. The new money will come in two tranches: A £13.9mln placing at 70p a share and a subscription offer of up to £1.1mln. The fundraiser extends the company’s cash runway by a further 18 months. In a separate statement, the research and development group announced interim results, which showed costs fell by £3.9mln to £7.9mln as it narrowed its remit to focus on its retinitis pigmentosa and exosomes programmes. The loss for the six months to September 30, 2020, was £7.1mln.

ImmuPharma PLC (LON:IMM) (Euronext Growth Brussels:ALIMM), the specialist drug discovery and development company, announced that Lind Global Macro Fund, LP has converted $355,112.50 (plus accrued but unpaid interest) of the convertible security issued pursuant to the convertible security deed dated June 10, 2020. The conversion price is 11p per share resulting in the issue by the company of 2,504,982 new ordinary shares of 10p each in the company. All of the convertible security issued to Lind has now been repaid or converted.

Vast Resources PLC (LON:VAST) said, after the close on Monday, that following the passing of a resolution at a general meeting it has acquired the remaining 20% interest in the Baita Plai polymetallic mine in Romania. The acquisition has been satisfied through the issue of over 2.8bn shares. Significant portions of these new shares have been issued to directors Roy Tucker and Andrew Prelea, as previously announced, and these are subject to a lock-up.

Power Metal Resources PLC (LON:POW) the AIM-listed metals exploration and development company said it has received a notice to exercise warrants over 3,750,000 new ordinary shares of 0.1p each at an exercise price of 0.7p per ordinary share. Subscription monies of £26,250 have been received by Power Metal in respect of the exercise.

Cadogan Petroleum PLC (LON:CAD) announced that its CEO Fady Khallouf, on November 20, 2020, purchased 95,000 ordinary shares of £0.03 each, in the capital of the company, on the London Stock Exchange at a price of £0.025 each. Following the purchase, the group noted, Khallouf holds in total 8,337,031 shares representing 3.41% of the company.

Clipper Logistics PLC (LON:CLG),  a leading provider of value-added logistics solutions and e-fulfilment to the retail sector, said it will announce its results for the six months ended October 31, 2020, on Thursday, December 3, 2020. The results will be presented via conference call for analysts only at 9.30am on the morning of the announcement, who should contact Buchanan at clipperlogistics@buchanan.uk.com if they would like to join.

Europa Metals Ltd. (LON:EUZ), the European focused lead-zinc and silver developer, has confirmed it will host a webinar today at 3.00pm GMT, for analysts and industry specialists, following the release on November 18, 2020, of the independent Preliminary Economic Study in respect of its wholly-owned Toral lead, zinc and silver, located in north-west Spain. The webinar will be hosted by Europa Metals, CEO, Laurence Read and its executive chairman, Myles Campion. To access the webinar please email: europametals@tavistock. co. uk no later than 1.00pm GMT today. The webinar will include a question and answer session following a presentation. A recording of the webinar will be made available on the company’s website at www.europametals. com following the event. A copy of the presentation is available at the following link: http :// www. rns-pdf. londonstockexchange. com/rns/2474G_1-2020-11-23. pdf

6.50am: Strong start predicted

The FTSE 100 is expected to climb on Tuesday ahead of an anticipated announcement later in the day from Prime Minister Boris Johnson about the UK’s full plan for a coronavirus Christmas.

London’s blue-chip benchmark was tipped to rise 28 points on the IG spreadbetting platform, a day after closing down 17.6 points or 0.3% at 6,333.84.

Wall Street was on the front foot overnight, with all three major stock market indices closing higher as traders took encouragement from the positive coronavirus vaccine news from the Oxford University trials, plus news that the White House transition was formally beginning and that Joe Biden wants to appoint former Fed chair Janet Yellen to the role of Treasury Secretary.

The Dow Jones Industrial Average finished almost 328 points or 1.1% higher at 29,591.27, while the S&P 500 added 0.6% and the Nasdaq Composite was nudged up 0.2%.

Asian markets were mixed on Tuesday, with the Nikkei 225 index up 2.5%, the Hang Seng ahead 0.1% but the Shanghai Composite lost 0.4%.

Back in the UK, After Downing Street confirmed yesterday that England’s lockdown will end next week but with a new tougher three-tiered system, today the prime minister is expected to confirm the full details of a four-nation approach for Christmas across the UK following a meeting with the devolved region’s leaders.

Around the markets:

  • Pound up 0.1% at US$1.3336
  • Brent Crude Oil up 1.2% to US$46.60
  • Gold down 0.5% to US$1,827.81 

6.45 am: Early Markets – Asia/Australia

Stocks in Asia-Pacific markets were mostly higher on Tuesday as investors in the region reacted to AstraZeneca’s statement on Monday that its coronavirus (COVID-19) vaccine developed along with the University of Oxford could be around 90% effective under a one-dosing regimen.

Japan’s Nikkei 225 led the gains by surging 2.5% while South Korea’s Kospi added 0.50%.

Mainland Chinese stocks were an exception with the Shanghai composite dipping 0.36% even as Hong Kong’s Hang Seng gained 0.09%.

In Australia, the S&P/ASX 200 rose 1.26% as the country’s iron ore exports reached a record high of A$10.9 billion in October.

READ OUR ASX REPORT HERE

Proactive Australia news:

Kingston Resources Limited (ASX:KSN) (FRA:RZZ) has taken an important step towards becoming a low-cost, mid-tier gold producer in the Asia-Pacific region with the completion of a positive pre-feasibility study (PFS) for its flagship 100%-owned Misima Gold Project in Papua New Guinea.

Alta Zinc Ltd’s (ASX:AZI) (FRA:8EE) managing director Geraint Harris will outline the company’s progress and plans at the Gorno Zinc Project and Punta Corna Cobalt Project in northern Italy during a 45-minute online webinar on Thursday, November 26.

Tyranna Resources Ltd (ASX:TYX) has started exploration, including a comprehensive soil sampling campaign, at the Dragon & Knight Project in Western Australia.

Adherium Ltd (ASX:ADR) has signed an agreement with Monaghan Medical Corporation to support the introduction of its Hailie® asthma and respiratory treatment platform and technology into specialist respiratory centres in the United States.

Proactive hosted a Gold Webinar today which saw three resource companies – Nexus Minerals Ltd (ASX:NXM), Twenty Seven Co Ltd (ASX:TSC) and Mako Gold Ltd (ASX:MKG) – outline objectives for the year and upcoming plans for 2021 as they aim to capitalise on strong gold market fundamentals.

Lake Resources Ltd’s (ASX:LKE) is making considerable progress with its strategy to sustainably produce the cleanest quality lithium carbonate at scale for use in the fast-growing battery market.

Australian Vanadium Ltd (ASX:AVL) (OTCMKTS:ATVVF) (FRA:JT71) has started geotechnical diamond drilling at Gabanintha Southern Resource blocks 50 and 60 of the Australian Vanadium Project to gather data for metallurgical and geotechnical purposes.

Anteris Technologies Ltd (ASX:AVR) is well on the way to achieving its operational goal for 2020 of completing the study of its proprietary DurAVR™ Transcatheter Heart Valve.

Source: proactiveinvestors



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