LONDON MARKET OPEN: CMC Markets and Cineworld top-and-tail FTSE 250

Thu, 25th Mar 2021 08:57

(Alliance News) - Stock prices in London opened mixed on Thursday as European Union leaders prepare to meet virtually, while CMC Markets and Cineworld bookended the mid-cap FTSE 250 index.

EU leaders are set to discuss proposals aimed at tightening restrictions on vaccine exports at a virtual European Council summit, after London and Brussels moved to calm tensions following weeks of ramped up rhetoric.

"Since the summit is set to continue into Friday, and may produce no firm answer given the reservations officials reportedly have over decision-making done via virtual meetings, the markets could be left wanting. However, any hint as to which direction the EU will swing could have an outsized impact on the UK markets especially," Spreadex analyst Connor Campbell said.

The FTSE 100 index was up 10.02 points, or 0.1%, at 6,722.91. The mid-cap FTSE 250 index was down 37.46 points, or 0.2%, at 21,365.08. The AIM All-Share index was 0.2% lower at 1,196.71.

The Cboe UK 100 index was flat at 669.32. The Cboe 250 was down 0.1% at 19,054.66, and the Cboe Small Companies down 0.1% at 13,864.44.

In mainland Europe, the CAC 40 in Paris was 0.3% lower, while the DAX 30 in Frankfurt was down 0.2%.

In the FTSE 100, Compass Group was up 1.8%. The contract caterer said it expects organic revenue to be almost a third lower as coronavirus restrictions hindered the caterer's operations.

Compass said it expects organic revenue for the three months to March 31 to be down 28% and organic revenue for the 6 months to March 31 to be down 31%.

The Chertsey-based firm said it has been operating at 71% of 2019 revenue in the interim period. Its operating margin is expected to increase by around 130 basis points to 4.0% in the second quarter from 2.7% in the first quarter.

Looking ahead, Compass said that, although Covid-19 vaccination efforts around the globe are advancing, the pace of volume recovery remains uncertain. However, it noted that the pipeline of new business and client retention continue to be strong.

Hargreaves Lansdown fund manager Steve Clayton said: "We hold Compass because of its strong track record in controlling its own operations and generating strong free cash flows in the process. The pandemic side-swiped the group and they were forced to raise new funds last year. That has now left them well positioned versus smaller, weaker rivals and we expect to see them capitalising on their position of strength as vaccinations progress and economies normalise in the quarters ahead."

Vodafone was up 1.5% after Morgan Stanley reinitiated coverage on the telecommunications firm with an Overweight rating.

At the other end of the large-caps, British American Tobacco was 2.0% lower and NatWest Group was down 1.5% after the stocks went ex-dividend, meaning new buys no longer qualify for the latest payout.

In the FTSE 250, CMC Markets as the best performer, up 7.0%, after the contract-for-difference trading platform said it expects to beat market expectations for annual income amid a high number of active customers.

CMC said it expects net operating income in the financial year that ends on March 31 to be slightly above the upper end of the current range of market consensus, which it put at GBP387.5 million to GBP399.61 million. It also raised its guidance for net operating income in financial 2022 to in excess of GBP330 million.

CMC said that in the period from January 1 to Wednesday this week, client income retention remained above 80%, though below levels reported for the first half of the financial year, as previously guided. Active client numbers for the full year will be more than 75,000, the company said.

At the other end of the midcaps, Cineworld Group was the worst performer, down 8.6%, after the movie theatre operator said the global pandemic severely hurt the industry and its annual results, with all sites across the company being temporarily closed from mid-March last year.

For 2020, Cineworld swung to a pretax loss of USD3.01 billion from a USD212.3 million profit in 2019 on revenue of USD852.3 million, down 81% from USD4.37 billion.

Brentford, London-based Cineworld said it looks forward to reopening cinemas worldwide, with the anticipated cinema re-opening from April 2 in the US, May 17 in the UK and also in May in the rest of the world where the company has operations, such as Ireland and Central Europe.

"Even with a lifting of restrictions the outlook continues to remain challenging, and any setbacks to the opening timetable will put even more pressure on the companyâ€™s finances. Cineworld has acknowledged that by saying that any further delays could well mean the company has to go back to its lenders cap in hand for further support," commented CMC Markets analyst Michael Hewson.

In Asia, the Japanese Nikkei 225 index closed up 1.1%. In China, the Shanghai Composite ended 0.1% lower, while the Hang Seng index in Hong Kong finished 0.1% lower.

The pound was quoted at USD1.3694 early Thursday, down from USD1.3728 at the London equities close Wednesday.

The euro was priced at USD1.1807, down from USD1.1834. Against the yen, the dollar was trading at JPY109.07, up from JPY108.77.

Brent oil was quoted at USD63.68 a barrel Thursday morning, down from USD63.98 at the London equities close Wednesday. Gold was quoted at USD1,732.18 an ounce, lower against USD1,736.33.

The economic calendar on Thursday has US gross domestic product at 1230 GMT with initial jobless claims due at the same time.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com