LONDON MARKET OPEN: Countryside down as CEO departs; ASOS to leave AIM

Thu, 13th Jan 2022 09:11

(Alliance News) - Stock prices in London opened lower on Thursday amid fears over rising US inflation, with Countryside Properties weighing on the FTSE 250 following the sudden departure of its CEO.

Meanwhile, ASOS announced plans to depart AIM.

The FTSE 100 index was down 15.43 points, or 0.2%, at 7,536.29 early Thursday. The mid-cap FTSE 250 index was down 43.75 points, or 0.2%, at 23,003.41. The AIM All-Share index was up 0.78 of a point at 1,175.39.

The Cboe UK 100 index was down 0.1% at 747.19. The Cboe 250 was down 0.3% at 20,542.03, and the Cboe Small Companies was flat at 15,713.58.

The CAC 40 in Paris stock index was down 0.3%, and the DAX 40 in Frankfurt was 0.2% lower.

In the FTSE 100, Dechra Pharmaceuticals was the best performer, up 1.6%. The veterinary products company said a strong trading performance continued throughout the first half of its financial year.

For the six months to December 31, net revenue increased by 15% at constant exchange rates and 10% at actual exchange rates.

Looking ahead, Dechra said its outlook for the financial year was positive and in line with the upper end of management expectations, despite continuing Covid-19 disruptions.

At the other end of the large-caps, Persimmon was the worst performer, down 3.5%, amid wider sector concerns pertaining to cladding costs.

The York-based housebuilder said total revenue in 2021 was GBP3.61 billion, up from GBP3.33 billion in 2020. New housing revenue was GBP3.45 billion, up from GBP3.13 billion.

Persimmon said it delivered 14,551 new home completions in 2021, up from 13,575 in 2020, with an average selling price of GBP237,050, up from GBP230,534.

Addressing sector concerns, Persimmon said it agreed with the UK government that leaseholders should not have to pay to remove flammable cladding.

Persimmon said it constructed only a "very small proportion" of buildings affected by this issue, which caused the deadly fire at the Grenfell Tower in London in 2017. In common with the rest of the housebuilding industry, it will shortly begin paying the cladding levy announced in the UK budget, it noted.

Oli Creasey, property research analyst at Quilter Cheviot, said: "Persimmon currently has GBP1.25 billion of cash on the balance sheet, and is paying a 9% dividend yield. Our concern is that while responsibility for the cladding issues across the sector may not fall entirely on companies such as Persimmon, the amount of available cash, and high cash returns to shareholders, puts them in the government's spotlight as a source of cash to pay for the work - fairly or not. The GBP75 million provision made for cladding work may be sufficient to cover Persimmon's direct responsibilities, but the government may yet ask for more."

Peers Barratt Developments, Taylor Wimpey and Berkeley were down 1.6%, 1.5% and 1.2% respectively in a negative read-across.

Tesco was down 2.1% despite the UK's largest supermarket chain reporting a strong festive period.

For the 19 weeks to January 8, like-for-like retail sales were up 2.6% compared to the same period the year before. Over the Christmas period alone, like-for-like sales grew 3.2% year-on-year.

Tesco said as a result of stronger-than-expected sales to date, it now expects retail operating profit for financial 2022 slightly above the top-end of its previous GBP2.5 billion to GBP2.6 billion guidance range. It posted retail operating profit of GBP1.99 billion in financial 2021.

"Shareholders seem a little less impressed, with the shares falling back in early trade. This seems a little churlish response but may have more to do with the fact that the shares are close to their highest levels in 11 months. It certainly doesn't mean they can't go higher longer term," commented CMC Markets analyst Michael Hewson.

In the FTSE 250, Countryside Properties was the worst performer, down 17%, after the housebuilder said Chief Executive Officer Iain McPherson is to step down with immediate effect by mutual agreement.

Countryside said it will conduct a thorough process in the search for a new CEO and whilst the search is underway Chair John Martin will stand in as interim CEO.

Compounding its shares' woes, Countryside said trading in the first quarter of its new financial year has been below the board's expectations.

On AIM, ASOS was up 8.8%. The online fashion retailer issued an upbeat trading update and said it plans to move to the London Main Market from AIM.

ASOS has dominated the junior market for the past 20 years as its largest, or one of its largest, stocks, with a market capitalisation of GBP2.45 billion. This would put ASOS in line to enter the FTSE 250 index.

ASOS ranks fifth on AIM by market capitalisation behind companies such as HutchMed and Fevertree Drinks.

In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.0%. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng index in Hong Kong finished marginally lower. The S&P/ASX 200 in Sydney closed up 0.5%.

The dollar was lower across the board. The pound was quoted at USD1.3740 early Thursday, up from USD1.3693 at the London equities close Wednesday.

The euro was priced at USD1.1478, up from USD1.1425 late Wednesday. Against the Japanese yen, the dollar was trading at JPY114.40, down from JPY114.73.

Brent oil was quoted at USD84.50 a barrel Thursday morning, down from USD84.68 late Wednesday. Gold stood at USD1,826.60 an ounce, up from USD1,822.60.

Thursday's economic calendar has US producer prices and the latest jobless claims numbers at 1330 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com