LONDON MARKET MIDDAY: Retailers Get Early Festive Boost From UK Data

(Alliance News) - Equities in London were in the green at midday on Friday after UK retail sales data provided some early Christmas cheer for high-street stocks.

"Retail has seen a remarkable recovery from the March/April collapse in sales. Even as parts of the UK economy saw lockdown restrictions tighten in October, consumption remained strong, an encouraging sign for retailers," said City Index's Fiona Cincotta.

Dragging at the bottom of the blue-chip FTSE 100 was accounting software firm Sage, sliding 13% as it guided to lower margins.

The FTSE 100 was up 28.80 points, or 0.5%, at 6,363.15 midday Friday. The mid-cap FTSE 250 index was up 57.95 points, or 0.3%, at 19,565.40. The AIM All-Share index was up 0.6% at 1,025.51.

The Cboe UK 100 index was up 0.5% at 633.64. The Cboe 250 was up 0.4% at 16,930.56, and the Cboe Small Companies up 0.7% at 11,331.68.

In mainland Europe, the CAC 40 in Paris was up 0.6% while the DAX 30 in Frankfurt was 0.5% higher on Friday.

"Tentative European gains this morning appear to maintain the ongoing consolidation phase, as markets tread water in the wake of the vaccine boost seen over the past two Mondays," said IG's Joshua Mahony.

In the latest round of encouraging vaccine news, an emergency use authorization request for the vaccine developed by Pfizer and BioNTech is expected to be filed with the US Food & Drug Administration on Friday.

Health Secretary Alex Azar told a White House briefing that the application was coming in the next day, confirming a timeline BioNTech co-founder Ugur Sahin shared with AFP.

Moncef Slaoui, the scientific head of the US operation to develop a vaccine, said the final green light would probably come in December – a timeframe echoed by Sahin.

The news came as California announced a night-time curfew and US authorities urged people everywhere not to travel for Thanksgiving as the country was hit by a spike of more than 2,200 deaths – the worst daily toll since May. New York City on Thursday closed its schools – affecting 1.1 million students – but left gyms and bars open.

Wall Street is on course for a lower open on Friday, with the Dow called down 0.2% and the S&P 500 down 0.1% but the tech-heavy Nasdaq bucking the trend, pointed up 0.1%.

The dollar was lower on Friday amid the risk-on mood in Europe.

Against the Japanese yen, the greenback fell to JPY103.79 versus JPY103.88 late Thursday.

The euro traded at USD1.1862 midday Friday, up from USD1.1840 late Thursday. Sterling was quoted at USD1.3275, higher than USD1.3225 at the London equities close on Thursday.

In addition to general dollar weakness, supporting the pound was some stronger-than-expected retail sales figures.

UK retail sales growth slowed month-on-month in October, but still managed to beat forecasts as consumers started Christmas shopping early, data showed.

Retail sales rose 1.2% month-on-month in October, marking the the sixth consecutive month of growth. While this was slower than the 1.4% posted for September, it beat expectations, according to FXStreet, of stagnation in the month.

Annually sales growth accelerated to 5.8% from 4.6% in September, again beating forecasts for a less-impressive 4.2% increase.

Feedback suggested that consumers had started Christmas shopping earlier this year, the Office for National Statistics said, further helped by early price discounting by a range of stores.

AJ Bell said Friday's data comes ahead of a "uniquely challenging festive period" for the retail sector.

"Shops face truncated trading thanks to Covid restrictions and the task of selling a much larger proportion of goods online. You need more than just a functioning website to handle internet-based orders; you also need warehouse space, which is at a premium, and the right systems and staff in place to ensure orders are processed accurately and efficiently," said AJ Bell investment director Russ Mould.

London-listed retailers were in the green at midday. JD Sports Fashion rose 2.2%, Dunelm advanced 3.8% and Dixons Carphone was up 3.3%.

In a separate release, the ONS said public sector net debt, excluding public sector banks, rose by GBP276.3 billion in the first seven months of the financial year to reach GBP2.076 trillion at the end of October, or around 100.8% of gross domestic product.

"Debt to GDP ratios in recent months have reached levels last seen in the early 1960s," the ONS commented.

Gold was quoted at USD1,865.88 an ounce on Friday, higher than USD1,861.42 on Thursday. Brent oil was trading at USD44.68 a barrel, up on USD44.22 late Thursday.

Turning back to the London Stock Exchange, the FTSE 100 climbed despite shares in constituent Sage slumping 13% on its margin outlook.

For its financial year ended September 30, Sage reported pretax profit of GBP310 million, up 17% from GBP266 million recorded the year prior. Organic recurring revenue rose 8.5% to GBP1.59 billion.

Looking to the new financial year, Sage said it expects organic recurring revenue growth to be around 3% to 5%, weighted towards the second half.

The Newcastle-upon-Tyne-based company said Sage Business Cloud adoption and growth will remain its "key objective" this coming financial year and beyond, adding it intends to increase its investment in sales and marketing and product development. This is expected to result in a planned reduction in organic operating margin of up to three percentage points.

Smurfit Kappa fell 3.0% to 3,126.00 pence, after the Irish paper and packaging firm said it had priced its non-pre-emptive share placing at EUR34.00 per share, raising gross proceeds of around EUR660 million.

Smurfit announced the placing plans on Thursday and said at the time it intended to raise around EUR650 million, with Credit Suisse, Davy and BNP Paribas acting as joint global co-ordinators and joint bookrunners.

The placing shares represent around 8.1% of Smurfit's issues share capital before the placing and the placing price represents an approximately 5.8% discount to the closing price on Thursday.

Helios Towers tumbled 12% after Millicom International Cellular, sold a 5.2% stake in the FTSE 250-listed telecommunications infrastructure company.

Millicom sold 52 million Helios Towers shares at 155 pence each for a total of GBP80.6 million. Following completion of the placing, Millicom will hold around 76.5 million Helios shares, representing a 7.6% stake.

By Lucy Heming; lucyheming@alliancenews.com

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