Chemring Share News (CHG)

(Alliance News) - London stocks underperformed versus European counterparts on Tuesday, with markets focusing on tighter virus restrictions and a record high for UK redundancies.

The FTSE 100 index was down 23.16 points, or 0.4%, at 6,508.67 midday Tuesday. The mid-cap FTSE 250 index was just 3.31 points higher at 19,767.33. The AIM All-Share index was up 0.1% at 1,068.32.

The Cboe UK 100 index was down 0.5% at 647.98. The Cboe 250 was flat at 17,050.00, and the Cboe Small Companies up 0.1% at 11,255.25.

Markets in mainland Europe were faring better. The CAC 40 in Paris was up 0.4%. The DAX 30 in Frankfurt was up 0.7%.

"European equities slipped a tad to start the session, mirroring the US and Asian peers; however, downside risks appear to be vaccinated to a degree so far," said Stephen Innes at Axi.

Wall Street is headed for a higher open, with the Dow Jones and the S&P 500 called up 0.6% and the Nasdaq up 0.4%.

The US kicked off a mass vaccination drive on Monday hoping to turn the tide on the world's biggest coronavirus outbreak, as the nation's death toll passed a staggering 300,000.

The start of the desperately awaited vaccine program coincided with several European countries announcing new lockdowns amid spiralling infections, highlighting the long road to ending the global pandemic.

Pressure is increasing on the UK government to rethink the easing of Covid-19 restrictions over the Christmas period after two leading medical journals warned the move would "cost many lives".

The relaxation of regulations would follow the government is putting London, much of Essex and part of Hertfordshire under the strictest Tier 3 restrictions from Wednesday.

In a rare joint editorial, the British Medical Journal and Health Service Journal called for the "rash" decision to relax social distancing measures over the festive period to be scrapped.

Laith Khalaf, financial analyst at AJ Bell, said London's move to Tier 3 highlights how the economy is "still vulnerable to the ebb and flow of the pandemic" amidst data released on Tuesday showing redundancies in the UK hit a record high.

"There's no flattening in the curve of redundancies at the moment, despite the last minute extension of the furlough scheme. The latest data provides a picture of activity in the labour market before an effective vaccine was announced and that news in itself may serve to save some jobs, as it gives businesses a bit of light at the end of the tunnel," said Khalaf.

For the three months to October, the UK unemployment rate was 4.9%, up on the 4.8% recorded for the three months to September though beating expectations, according to FXStreet, of 5.1%. October's reading was 1.2 percentage points higher than a year earlier, the ONS said.

Early estimates for November indicate that the number of payrolled employees fell by 2.7% year-on-year, which is a fall of 781,000 employees. Since February - just before the pandemic gripped the UK - 819,000 fewer people were in payrolled employment.

Redundancies reached a record high of 370,000 in the three months to October. This marked an increase of a record 217,000 on the quarter, though the number of redundancies "fell slightly" in October.

The pound was up slightly at USD1.3352 on Tuesday at midday from USD1.3340 late Monday.

The euro traded at USD1.2163 on Tuesday in London, higher than USD1.2130 late Monday. Against the yen, the dollar edged down to JPY103.96 versus JPY104.00.

Gold was quoted at USD1,843.94 an ounce on Tuesday, higher than USD1,826.61 on Monday. Brent oil was trading at USD50.36 a barrel, up from USD49.24 late Monday in London despite the International Energy Agency trimming its global oil demand forecasts.

For this year, total oil demand will fall by 8.8 million barrels per day to 91.2 million barrels per day, reflecting a marginal downward revision to the estimate given in its last monthly report in November. For 2021, the IEA said it had cut its oil demand growth estimate by 170,000 barrels per day to 5.7 million barrels per day "mainly because of another downgrade for jet fuel/kerosene demand."

In London, JD Sports Fashion was the among performers in the FTSE 100 after unveiling the acquisition of San Jose, California-based Shoe Palace for USD325 million.

For 2019, Shoe Palace delivered pretax profit of USD52 million on revenue of USD435 million. It was started in 1993 by the Mersho family and has 167 stores, most of which are under the Shoe Palace brand. About half the stores are in California, with some presence in seven other US states.

JD Sports shares were up 1.4%.

Chemring in the FTSE 250 rallied 11% as it reported double-digit rises in annual profit and revenue, both ahead of management expectations.

For the year to the end of October, Chemring posted a pretax profit of GBP43.3 million, up 62% from GBP26.7 million the year before, as non-underlying costs dropped to GBP8.4 million from GBP12.7 million. On an underlying basis - excluding one-off costs - pretax profit rose by 30% to GBP51.7 million from GBP39.7 million the prior year.

Revenue grew by 20% year-on-year to GBP402.5 million from GBP335.2 million, as Chemring's countermeasures facilities in Salisbury and Australia remained operational throughout the period.

Shaftesbury fell 4.7% amid a swing to annual loss and as the London West End landlord noted the Tier 3 restrictions soon to hit the capital.

Shaftesbury reported a pretax loss of GBP699.5 million, compared to a profit of GBP26.0 million the year before. The company reported a net asset value per share of GBP7.43 as at September 30, down 24% on GBP9.82 a year ago.

Looking ahead, Shaftesbury said pandemic control measures are likely to remain for most of 2021, however the impact is reducing, with a gradual return of local and domestic footfall as confidence returns. On Monday, that suffered a setback, when the UK government announced that London, parts of Essex and Hertfordshire will enter Tier 3 restrictions from Wednesday, following "very sharp, exponential rises" in cases.

On AIM, online estate agent Purplebricks surged 18% as it guided to full-year earnings ahead of consensus.

Purplebricks swung to a pretax profit of GBP4.3 million in the six months ended October 31, compared to a loss of GBP2.3 million a year prior. Revenue was GBP44.2 million, showing a 6.2% decrease from GBP47.1 million in 2019.

"Whilst there are reasons to remain cautious on the economic outlook, we are confident in the levers which are under our control, and we currently expect adjusted Ebitda for the full year to exceed the upper end of the current range of consensus," Purplebricks said.

By Lucy Heming; lucyheming@alliancenews.com

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