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LONDON BRIEFING: Risk-on in Europe despite worries over Covid variant

Mon, 29th Nov 2021 08:27

(Alliance News) - European markets were rebounding early Monday, ignoring another downturn in Asia as countries re-tightened travel restrictions and mask-wearing rules in the face of a new Covid-19 variant.

The key stock indices in London, Paris and Frankfurt all opened higher, despite another negative close in Tokyo, Hong Kong and Sydney. The FTSE 100 was up 1.0%, the CAC 40 up 1.3% and the DAX 40 up 1.2%.

Meanwhile, safe-havens gold and the yen were down, while oil was up.

"After suffering heavy losses on Friday, risk assets start the week on a slightly firmer footing on the (yet unproven) assumption that Omicron may not lead to more severe illness and that vaccines may still prove effective," commented Dutch bank ING. "It will probably take a couple of weeks to better understand this variant and until then risk-sensitive FX probably stays fragile."

Here is what you need to know at the London market open:



MARKETS



FTSE 100: up 1.0% at 7,111.73



Hang Seng: down 1.0% at 23,852.24

Nikkei 225: closed down 1.6% at 28,283.92

S&P/ASX 200: closed down 0.5% at 7,239.80



DJIA: closed down 905.04 points, or 2.5%, at 34,899.34

S&P 500: closed down 2.3% at 4,594.62

Nasdaq Composite: closed 2.2% at 15,491.66



EUR: down at USD1.1268 (USD1.1315)

GBP: flat at USD1.3326 (USD1.3322)

USD: up at JPY113.47 (JPY113.24)

GOLD: down at USD1,795.77 per ounce (USD1,799.30)

OIL (Brent): up at USD75.93 a barrel (USD73.54)

(changes since previous London equities close)



ECONOMICS AND GENERAL



Monday's key economic events still to come

1100 CET EU business & consumer surveys

1400 CET Germany provisional consumer price index

0930 GMT UK monetary & financial statistics

1100 GMT Ireland retail sales index



Japan announced plans to bar all new foreign travellers over the Omicron variant of Covid-19, joining a growing list of countries trying to erect virtual fortresses against the heavily mutated new strain. G7 health ministers are set to meet later Monday to discuss the new strain – first detected in South Africa – and the fresh challenge it poses to global efforts to battle the pandemic. The Japanese government has become the latest country to reinstate strict border controls that many had hoped would be a thing of the past, barring all new foreign arrivals just weeks after announcing it would finally allow some visa holders to enter the country. Prime Minister Fumio Kishida said the country was "in a stronger position against the Omicron variant than other countries," citing voluntary mask-wearing and self-restraints about risk behaviours.



The Covid-19 variant also is throwing a tentative opening-up into doubt in Australia, where the government is now reconsidering plans to relax border restrictions further in just two days. But with three Omicron cases confirmed in people flying into Australia from southern Africa -– two landing in Sydney and one in the northern city of Darwin – Prime Minister Scott Morrison appeared reluctant to re-impose the kinds of strict lockdowns seen earlier this year. "We don't just need to learn to live alongside Covid, we need to learn to live alongside the variants as well," he said.



BROKER RATING CHANGES



UBS RAISES ROYAL MAIL TO 'BUY' (NEUTRAL) - PRICE TARGET 575 (440) PENCE



MORGAN STANLEY CUTS HARGREAVES LANDSDOWN TO 'UNDERWEIGHT' (EQUAL-WEIGHT)



MORGAN STANLEY CUTS ABRDN TO 'UNDERWEIGHT' (EQUAL-WEIGHT)



COMPANIES - FTSE 100



Land Securities will start the process to look for a new chair as Cressida Hogg prepares to step down from her role, Sky News reported. A replacement will not be appointed until 2023, which is when Hogg's tenure at the FTSE 100 real estate investment trust reaches nine years, Sky News noted. It has not been made clear whether Hogg's successor will be picked from Landsec's non-executive directors. Hogg was appointed chair in 2018, replacing Alison Carnwath, and has also been part of Landsec's board since 2014.



COMPANIES - FTSE 250



Hammerson confirmed it is in talks over the possible disposal of stake in the Silverburn shopping centre in Glasgow for GBP140 million. Silverburn is held in a 50-50 joint venture with the Canada Pension Plan Investment Board. "There can be no certainty that a transaction will take place, but the company confirms the pricing under discussion is GBP140 million, which would represent a class 2 transaction. The company will provide a further update in due course, if appropriate," said Hammerson. A class 2 transaction is large enough to require shareholder approval under UK listing rules.



The UK Competition & Markets Authority said it will be referring CHC Group's acquisition of Babcock's oil & gas aviation unit to a phase two probe.The CMA decided earlier in November that the merger may reduce competition, and so the regulator gave CHC until Thursday last week to submit proposals for how to remedy its concerns. CHC informed the CMA that no undertakings would be forthcoming, so the regulator has referred the merger for a phase two investigation.



The CMA also raised concerns over Grafton's sale of its merchanting business in the UK to builders merchant Huws Gray. For the Grafton deal, the CMA will refer it for a phase two probe unless the companies offer undertakings to address competition concerns. They have until next Monday to quell the regulator's concerns, otherwise the CMA will progress the probe.



COMPANIES - MAIN MARKET AND AIM



AG Barr lifted its outlook, reporting a strong performance in the face of supply chain disruption. The soft drinks company said sales have grown ahead of expectations, with its performance in both 'on-the-go' and hospitality sectors particularly strong. As a result, the maker of Irn-Bru now expects full-year revenue and pretax profit to be ahead of current market expectations. It expects revenue of around GBP264 million and pretax profit around GBP41 million. Revenue for 2020 was GBP227.0 million and pretax profit, before exceptional items, was GBP32.8 million. "The fast-moving situation in relation to the Covid-19 pandemic remains a risk; however we expect our revenue momentum to continue into 2022," AG Barr added.



Amigo Holdings swung to an interim profit, but warned that the sanction of a new scheme to address historic complaints "is increasingly urgent". The guarantor loans provider reported revenue of GBP56.5 million for the half-year to September 30, down 39% from GBP92.3 million a year ago. However, it swung to a pretax profit of GBP2.1 million from a loss of GBP62.6 million year-on-year. This was as total operating expenses reduced to GBP18.8 million from GBP116.2 million. Amigo noted that it remains unable to restart new lending, leading to a 42% decline in customer numbers and a 54% drop in the net loan book. However, underlying collection levels have continued to be better than modelled. Commenting on its scheme to address customer complaints, Amigo said approval remains subject to key milestones such as a second successful creditor vote and approval by the High Court at a sanction hearing. "At this point, the board does not consider there to be enough certainty to account for claims redress on the basis that a scheme will be sanctioned," the company warned, adding it will be proposing an equity raise alongside the scheme to support the future business.



COMPANIES - GLOBAL



Automaker Nissan Motor wants half its global sales to be electric or hybrid vehicles by 2030 and plans to plough billions of dollars into the effort, AFP reports. The move follows in the footsteps of other major global automakers, which have increasingly signalled a move towards electric and hybrid vehicles as concern about climate change grows. Unveiling its new long-term plan, Nissan said it will launch 23 new models, including 15 new electric vehicles, in a bid to reach the 2030 goal. Last year, only around 10% of Nissan's global sales were EVs or hybrids, and the firm said the new target would help it achieve carbon neutrality across the lifecycle of its products by 2050. Nissan Chief Operating Officer Ashwani Gupta stressed the importance of its Sunderland plant in the UK for the firm's plans. During a news conference, he told PA Media: "Europe will take the lead on electrification around the world for Nissan. In Europe, Sunderland is the one which will take the lead towards electrification."



Monday's shareholder meetings

Brand Architekts Group PLC - AGM

Brown Advisory US Smaller Companies PLC - AGM

Grit Real Estate Income Group Ltd - AGM

MySale Group PLC - AGM

MySale Group PLC - EGM re listing on ASX, cancellation from AIM

TechFinancials Inc - AGM

TR European Growth Trust PLC - GM re share split



By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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