LONDON MARKET OPEN: Stocks rise; Ocado sinks after fundraise

Tue, 21st Jun 2022 08:46

(Alliance News) - Stock prices in London opened higher on Tuesday with DS Smith rising in the FTSE 100, while Ocado shares fell after announcing the results of its fundraise.

The UK flagship index was up 29.53 points, or 0.4%, at 7,151.34. The mid-cap FTSE 250 index was up 59.44 points, or 0.3%, at 19,070.26. The AIM All-Share index was up 1.01 point, or 0.1%, at 898.18.

The Cboe UK 100 index was up 0.5% at 712.60. The Cboe 250 was up 0.3% at 16,753.33, and the Cboe Small Companies up 0.3% at 13,725.71.

In mainland Europe, the CAC 40 stock index in Paris was up 1.2%, while the DAX 40 in Frankfurt was up 0.9%.

In the FTSE 100, DS Smith was up 2.0%, after the packaging company raised its dividend after strong annual results.

For the financial year that ended April 30, pretax profit increased 64% to GBP378 million from GBP231 million the year before, on revenue of GBP7.24 billion, up 21% from GBP5.98 billion.

DS Smith declared a total dividend of 15.0 pence, up 24% from 12.1p paid out in financial 2021.

Looking ahead, DS Smith said it has seen good early momentum at the start of its current financial year, despite a more-challenging backdrop.

"DS Smith used the pandemic as a springboard and it is impressive how far it has come. The group's using some of the excess cash running through the business to fund expansion, while the rest goes toward paying down debt and rewarding shareholders. For now it looks like the group's got the balance right," commented Hargreaves Lansdown analyst Laura Hoy.

Rival paper and packaging companies Mondi and Smurfit Kappa were up 1.7% and 1.2% respectively in a positive read-across.

At the other end of the large-caps, Ocado Group was the worst performer, down 5.0%, at 834.00 pence, after the online grocer completed its fundraise, announced after the market close on Monday.

Ocado had said it planned to raise the funds to expedite growth plans, amid what it called surging online grocery demand in the wake of the Covid-19 pandemic and the need to bring new technology solutions to the market faster.

The online grocer placed 72.3 million shares at 795p each, raising GBP575 million. The placing price was a 9.4% discount to Monday's market close of 877.6p.

The placing, led by Goldman Sachs, was done in conjunction with an offer to retail investors via PrimaryBid involving 246,405 shares and 150,944 subscription shares taken by members of the senior management team, including Chief Executive Officer Tim Steiner, Ocado said.

The total equity raise was GBP578 million, and the new shares represent about 9.7% of Ocado's share capital total prior to the raise.

Associated British Foods was down 1.5% after JPMorgan downgraded the Primark clothing chain owner to 'neutral' from 'overweight'.

In the FTSE 250, Spire Healthcare was the best performer, up 3.5%, after Berenberg started coverage on the private hospital group with a 'buy' rating.

At the other end of the midcaps, Asos was the worst performer, down 4.2% after JPMorgan cut the online fashion retailer to 'neutral' from 'overweight'. Asos joined the FTSE 250 at the start of this week following an index review earlier this month.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 1.8%. In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong was up 1.4%. The S&P/ASX 200 in Sydney ended up 1.4%.

The economic events calendar on Tuesday has US existing home sales at 1500 BST. Financial markets in New York reopen after being closed for a holiday on Monday.

The pound was quoted at USD1.2300 early Tuesday, up from USD1.2246 at the London equities close Monday.

The euro was priced at USD1.0540, higher against USD1.0528. Against the yen, the dollar was trading at JPY135.15 in London, up from JPY135.03.

Brent oil was quoted at USD114.60 a barrel Tuesday morning, up from USD113.70 late on Monday. Gold stood at USD1,834.42 an ounce, lower against USD1,838.66.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com