LONDON MARKET MIDDAY: Ocado Leads Way As FTSE Shakes Off UK Lockdown

(Alliance News) - London's FTSE 100 was in positive territory midday Monday, with grocers more than offsetting declines in the non-essential retail sector, which will be forced to close this week after UK Prime Minister Boris Johnson announced a month-long lockdown in England.

"The main European market indices gave a relatively muted reaction to the latest lockdown restrictions in England, Portugal and Austria as arguably these measures were widely expected by investors," said AJ Bell Investment Director Russ Mould.

"It is important to remember that approximately three quarters of the FTSE 100 generates its earnings overseas, so a new England-wide lockdown is less of an issue to the index although it does affect investor sentiment."

In London, the FTSE 100 index was up 71.95 points, or 1.3% at 5,649.22. The more UK domestic-oriented FTSE 250's gains were less sharp, it rose 16.42 points, or 0.1%, to 17,230.80. The AIM All-Share was 0.2% lower at 947.03 points.

The Cboe UK 100 was up 1.0% at 561.26. The Cboe 250 shed 0.3% at 14,476.44. The Cboe Small Companies was down 0.3% at 9,436.25.

In mainland Europe, the CAC 40 in Paris was 2.0% higher and Frankfurt's DAX 30 climbed 2.1%.

AJ Bell's Mould noted that blue-chip takeaway delivery firm Just Eat Takeaway was among those befitting from the latest UK restrictions. In the last lockdown, consumers turned to takeaways since restaurants were not allowed to provide in-dining.

"Supermarkets are going to be in demand once again, with chatter that big queues already started to form over the weekend," Mould added.

J Sainsbury, Tesco and WM Morrison were 3.1%, 2.7% and 1.1% higher, respectively.

Ocado was also in the green, jumping 10%, the best of the blue-chips. Online grocer Ocado upped its annual earnings guidance Monday as its Marks & Spencer Group joint venture grows in strength.

Ocado expects annual Ebitda to be over GBP60 million, up from its previous forecast of GBP40 million.

M&S shares were 2.5% higher in the FTSE 250 index.

Back among the FTSE 100s, JD Sports lost 2.8%, among the worst performers, as the athleisure retailer prepares to shutter stores once again. Elsewhere on the high street, Next lost 0.6% and Sports Direct owner Frasers Group was down 4.2%.

AB Foods shares recovered from earlier losses and were flat midday Monday. The Primark owner predicted a GBP375 million hit due to closures of its estate in the UK and beyond.

The company releases annual results on Tuesday.

Kingfisher shares were 4.5% higher amid hopes that DIY shops may be exempt from the harsher restrictions imposed on the non-essential sector. Chains such as B&Q did reopen in April, earlier than non-essential retail, though with social distancing measures in place.

British Airways owner International Consolidated Airlines Group lost 1.6% following the announcement of the new lockdown measures in the UK, which prevent overnight stays in the UK and abroad. Ryanair rose 3.9%, however, despite a swing to interim loss.

Ryanair revenue came in at EUR1.18 billion in the six months ended September 30, down 78% from EUR5.39 billion and the airline swung to a pretax loss of EUR432.3 million from a EUR1.26 billion profit.

Customer numbers were 80% lower at 17.1 million, demonstrating the hit Ryanair has taken from Covid-19 travel restrictions.

Bucking the general travel malaise however, was cruise ship operator Carnival, up 6.3%, the best performing mid-cap.

US health authorities late Friday issued a detailed set of requirements that would allow cruise ships to resume services as early as next month. The requirements for a "phased resumption" of cruise ship passenger operations were released by the US Centers for Disease Control & Prevention. This would include "simulated voyages to test cruise ship operators' ability to mitigate Covid-19 risk," the CDC said.

At the other end of the mid-caps, Serco shed 12%.

The outsourcer was dealt a blow as the UK's Ministry of Defence renationalised the Atomic Weapons Establishment. AWE has been managed by a joint-venture with Lockheed Martin and Jacobs since 2000. Serco and Jacobs each had a 24.5% stake in AWE and Lockheed 51%.

The pound was quoted at USD1.2916 midday Monday, down from USD1.2952 at the London equities close Friday. Against the dollar, the euro edged up to USD1.1652 early from USD1.1649 at the European equities close Friday.

Sterling and the single currency were in opposite directions on the dollar following the latest batch of manufacturing PMI data.

The UK's manufacturing growth slowed somewhat in October, data showed, despite signs that pent-up demand after the Spring lockdown is losing steam. The seasonally adjusted IHS Markit/CIPS purchasing managers' index slipped to 53.7 in October, down from 54.1 in September.

The UK's manufacturing growth slowed somewhat in October, data showed, though it did outperform flash estimates despite signs that pent-up demand after the Spring lockdown is losing steam.

"The upturn showed further signs of losing impetus, as the initial boost to growth from the economy reopening faded and job losses accelerated," IHS Markit commented.

Helped by a strong showing by Germany, Austria and Italy, the eurozone's manufacturing sector notched up its fourth successive month of growth.

The IHS Markit eurozone manufacturing purchasing managers' index came in at 54.8 in October, improved from 53.7 in September.

Versus the Japanese yen, the dollar rose to JPY104.72 compared USD104.56 at the London equities close on Friday.

Still to come on Monday is a US manufacturing PMI reading at 1445 GMT.

Ahead of the reading, and with all eyes on tomorrow's presidential poll, US futures were higher. The Dow Jones Industrial Average is called up 1.9%, the S&P 500 up 1.6% and the Nasdaq Composite 1.3% higher.

Brent oil prices continued to hit by Covid-19 lockdowns. A barrel of the North Sea benchmark fetched USD37.10 midday Monday, down from USD37.68 a barrel at the London market close Friday.

Gold was quoted at USD1,887.86, up from USD1,879.42.

By Eric Cunha; ericcunha@alliancenews.com

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