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(Alliance News) - Markets in Europe got off to a rough start on Tuesday with rising Covid cases around the continent weighing on investor sentiment.
The FTSE 100 was down 40.03 points, or 0.6%, at 7,216.24 early Tuesday. The mid-cap FTSE 250 index was down 232.29 points, or 1.0%, at 23,197.41. The AIM All-Share index was down 9.82 points, or 0.8%, at 1,210.41.
The Cboe UK 100 index was down 0.6% at 714.56. The Cboe 250 was down 1.0% at 20,651.23, and the Cboe Small Companies was down 0.3% at 15,289.20.
AvaTrade analyst Naaem Aslam said: "Rising coronavirus cases in Europe are also becoming a cause of concern for investors, with Germany raising its restrictions and Austria implementing lockdowns. Having said that, thanks to effective vaccination drives by the US government, the likelihood of lockdowns in the US is very low. This is evident from the fact that travel for the Thanksgiving holiday is expected to be the highest since the pandemic began in 2020."
The US State Department urged Americans Monday not to travel to Germany and Denmark due to surging Covid-19 cases in Europe. The US issued Level 4 travel advisories – the highest level – for both countries, "indicating a very high level of Covid-19 in the country".
In mainland Europe, the CAC 40 in Paris was down 1.2%, while the DAX 40 in Frankfurt was off 1.3% early Tuesday.
The services economies led the way in both France and Germany this month, according to data from IHS Markit on Tuesday.
Germany's flash services purchasing managers' index improved to 53.4 points in November from 52.4 points in October. November's flash reading represents a two-month high. Any figure above 50.0 denotes growth.
However, the pace of growth in the manufacturing sector eased. The manufacturing flash PMI declined to a 10-month low of 57.6 in November, from 57.8 in October.
Markit analyst Lewis Cooper, however, said the rate of Germany's economic expansion is "levelling off".
Separate data from Markit showed France's private sector also expanded.
France's flash composite PMI climbed to 56.3 points in November from 54.7 in October. The November figure was a four-month high.
Sterling was quoted at USD1.3381, lower than USD1.3412 at the London equities close on Monday.
The euro traded at USD1.1262 early Tuesday, broadly flat on USD1.1263 late Monday. Against the yen, the dollar was trading at JPY114.58 versus JPY114.74, slipping back after surpassing JPY115 for the first time since 2017.
In London, Compass shed 1.8% in early trading. The contract caterer said it booked record new business wins and client retention in financial 2021 but still saw revenue drop for the year as a whole.
In the 12 months that ended September 30, revenue was down 10% to GBP17.91 billion from GBP19.94 billion the year before. Compass noted its underlying revenue recovered to 88% of 2019 revenue by the fourth quarter. Full-year underlying revenue was 77% of financial 2019's.
"Whilst we have made progress recovering revenue in the second half, driven by strong net new business, the pandemic continued to affect performance for the year. Our Healthcare & Senior Living and Defence, Offshore & Remote sectors performed well above pre-pandemic revenues, and we experienced a strong recovery in Education and Sports & Leisure in the fourth quarter. Revenues in our Business & Industry sector have remained subdued due to the delayed return to offices in our major markets," Compass explained.
Pretax profit doubled to GBP464 million from GBP210 million. Operating profit jumped 85% to GBP545 million from GBP294 million.
Compass reinstated its dividend, declaring an annual payout of 14 pence per share.
Looking ahead, Compass expects financial 2022 organic revenue growth of between 20% and 25%.
Severn Trent was down 1.6%. The water utility saw profit grow in the first half of its financial year, attributed to improved efficiency while meeting its customer outcome delivery incentives.
"We've made another strong start to the year as we focus on delivering for stakeholders across our region and delivering for customers in the areas that matter most to them, all while driving the financial performance of our business," Chief Executive Liv Garfield said.
In the six months that ended September 30, pretax profit increased 16% to GBP146.9 million from GBP126.5 million.
Revenue rose 8.0% to GBP958.2 million from GBP887.6 million. Regulated Water & Waste Water revenue was up to GBP893.9 million from GBP829.9 million.
Severn upped its interim dividend by 5.7%, increasing the payout to 40.86 pence from 40.63p a year before.
Among London midcaps, Telecom Plus was the star performer, gaining 5.1%.
In the six months to September 30, pretax profit slipped to GBP19.9 million from GBP21.5 million. The company's total administrative expenses rose to GBP46.8 million from GBP42.5 million.
Revenue improved to GBP371.3 million from GBP349.4 million.
"These results demonstrate our resilience as a supplier of essential household services following the disruption caused by the pandemic," Chief Executive Andrew Lindsay said.
"The recent energy crisis has brought a seven-year destructive price war to an abrupt end, and the subsequent spate of energy supplier failures has demonstrated the inherent flaws in the regulator's policy of 'competition at all costs'. Consumers now face a cost running into billions of pounds to tidy up the mess, so we welcome Ofgem's commitment to prevent this situation from happening again, and to create a retail market that allows sustainable competition between suppliers, whilst enabling us to meet the challenges of the transition to net zero together."
Telecom Plus maintained its interim dividend at 27 pence.
The firm said it added 15,000 customers in October and is guiding for 10% growth in its customer base during the second half, with double-digit annual percentage growth thereafter.
Pets at Home was 2.7% higher.
The pet products seller attributed its growth in the first half of its financial year to a sustained increase in new pets.
In the 28 weeks to October 7, pretax profit nearly doubled to GBP70.6 million from GBP38.9 million a year before.
Revenue improved by 18% to GBP677.6 million from GBP574.4 million. Total customer revenue, which includes joint ventures, rose 20% to GBP867.6 million from GBP724.7 million.
Retail like-for-like revenue growth was 22%, while Vet Group like-for-like revenue growth was 26%.
"Strong growth in pet ownership continues, reflected in the elevated level of customer registrations across our Puppy and Kitten club, and the performance across our retail and veterinary operations continues to be robust, notwithstanding some widely reported challenges in the near-term operating environment relating to supply, logistics and labour availability," Pets at Home said.
The pet supplies retailer is guiding for annual underlying pretax profit to be at the top end of the current range of analyst expectations of GBP128 million to GBP135 million. Underlying pretax profit was GBP87.5 million in financial 2021.
Faring less well was online electricals retailer AO World. The firm slumped 26% in early trading.
In the six months to September 30, AO swung to a pretax loss of GBP10 million from a GBP18 million profit a year before.
Total revenue increased 6.0% to GBP760 million from GBP717 million.
AO World said its revenue growth was stunted by the nationwide shortage of delivery drivers in the UK and the ongoing disruption in the global supply chain. What's more, the German online market has seen significantly increased competition. The company said it has hired about 500 new drivers recruited to meet peak period demand.
"As we now look to the second half, we continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage. In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties," AO said.
AO is now guiding for annual revenue to be flat to minus 5% compared to the year before. The Bolton, England-based company, which operates electrical goods websites in the UK and Germany, recorded revenue of GBP1.43 billion in the financial year that ended March 31.
The Shanghai Composite closed up 0.2% on Tuesday, while the Hang Seng index gave back 1.2%. The S&P/ASX 200 in Sydney gained 0.8%.
Financial markets were shut in Tokyo as the country celebrates Labour Thanksgiving Day.
Gold was quoted at USD1,805.40 an ounce early Tuesday, lower than USD1,818.94 on Monday. Brent oil was trading at USD79.12 a barrel, down from USD79.86 late Monday.
The economic calendar on Tuesday has PMIs from Germany, the eurozone and the UK at 0830 GMT, 0900 GMT and 0930 GMT respectively. A PMI from the US is out at 1445 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
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