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LONDON MARKET MIDDAY: Down Despite Deal Report Boost For M&S And Ocado

Mon, 28th Jan 2019 12:08

LONDON (Alliance News) - Stock trading in London started the week in a subdued fashion, with gains by Ocado and M&S unable to prevent the FTSE 100 from registering a small decline by midday on Monday.The large-cap index was down 26.34 points, or 0.4%, at 6,782.88 . The FTSE 250 was 51.08 points lower, or 0.3%, at 18,592.50. The AIM All-Share was up 0.1% at 912.81.The Cboe UK 100 was down 0.5% at 11,517.73 points, while the Cboe UK 250 was 0.3% lower at 16,598.49 and the Cboe UK Small Companies flat at 11,199.29.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.4% and 0.3% respectively at midday."European markets are suffering modest losses this morning, but are already off the lows, as investors take heart from a better finish to US markets on Friday, and ignore a mixed session in Asia," said IG chief market analyst Chris Beauchamp.He added: "The temporary resolution of the US government shutdown removes one area of worry, although only for a while, and for now traders are cautious ahead of US-China trade talks."Other sources of uncertainty this week are Tuesday's parliamentary votes on Brexit in the UK and the latest monetary policy decision from the Federal Reserve on Wednesday in the US. With parliamentary tradition upended by the battle for control of Brexit, what would normally have been just a bland neutral motion by the government on UK Prime Minister Theresa May's policy stance now threatens to take on a life of its own.As a result of a previous rebellion, MPs are able to table amendments to the motion, with the handful selected by Speaker John Bercow set to get voted on and potentially alter the course of the scheduled EU exit.Bercow is expected to choose up to half a dozen of the myriad of amendments put down using a selection process which is believed to include taking into account the backing each one has amassed and the likelihood of it passing.The fact that Work & Pensions Secretary Amber Rudd and Justice Secretary David Gauke have both backed the idea of MPs being given a free vote on some aspects of Brexit adds to the air of unpredictability as the Commons clash approaches.The pound was quoted at USD1.3168 at midday, holding up well compared to USD1.3173 late Friday.Over in the US, stocks are pointed to a lower open with the Dow Jones Industrials and Nasdaq Composite both seen down 0.5%, and the S&P 500 down 0.4%. Construction machinery firm Caterpillar is set to report earnings before the market open on Monday as another busy week for corporate earnings ensues, with figures from aerospace firm Airbus, social media network Facebook and online retailing giant Amazon due in the coming days.Bucking the FTSE 100's decline to start the week was online grocer Ocado, shares up 3.8% on a report that Marks & Spencer is looking to launch a GBP1 billion food delivery service using Ocado technology.Ocado vans have been delivering Waitrose groceries under a contract which is due to expire in September 2020. However, Waitrose now has its own separate delivery operation, and the Daily Mail reported on Sunday that M&S is mulling buying the Waitrose part of the Ocado business and replacing it with its own products. Shares in M&S were up 1.1% at midday. "Marks & Spencer needs to try every possible angle if it stands of chance of breathing new life into the company. Food has long been a crucial part of its attraction to customers so having a proper delivery service is a natural step forward," said Russ Mould, investment director at AJ Bell.Turning to the benefits of a tie-up with M&S for Ocado, he said: "Such a move would be another tick in the box for Ocado which is adding relationships with supermarkets in several parts of the world. Its core focus is now selling technology expertise to the food retail sector rather than running physical delivery operations."In the FTSE 250, TI Fluid Systems rose 6.3% after it said constant currency annual revenue growth should exceed growth in global light vehicle production by around 3%.TI Fluid's adjusted earnings before interest and tax margin is set to be "broadly" in line year-on-year at 11%. These results are in line with expectations as stated in November, and TI Fluid said it remains confident it can keep outperforming the light vehicle market. TI Fluid Systems makes automotive fluid storage, carrying and delivery systems for light vehicles. The company also said Chief Financial Officer Timothy Knutson will be leaving. Knutson will stay in his role until a replacement is found, which is expected to be done by the end of 2019.Dixons Carphone was up 4.3% after Morgan Stanley lifted its rating on the electricals retailer to Overweight from Equal Weight.Suffering from a broker rating downgrade was Drax Group, shares 2.6% lower after HSBC cut the power generation company to Hold from Buy.Elsewhere on the Main Market, Petra Diamonds shares tumbled 15% as the miner said interim revenue rose as diamond production and sales both increased, though net debt grew amid cash flow pressure. For the six months ended December, revenue rose 8.0% to USD207.1 million from USD191.7 million the year prior. This was after diamond production rose 9.5% to 2.0 million carats from 1.8 million carats the year before.However, net debt rose 7.0% to USD557.2 million from USD520.7 million six months earlier after "positive" operating cash flow was held back by a number of costs.

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