LONDON MARKET OPEN: Watches Of Switzerland Ticks Along Nicely

(Alliance News) - Stock prices in London opened lower on Thursday with a raft of shares going ex-dividend weighing on the FTSE 100, while a stalemate in Congress over US economic stimulus was eroding investor sentiment.

In London, early Thursday, the blue-chip FTSE 100 index was down 66.72 points, or 1.1%, at 6,213.41. The mid-cap FTSE 250 index was down 102.88 points, or 0.7% at 17,987.50. The AIM All-Share index was up 0.2% at 956.87.

The Cboe UK 100 index was down 1.2% at 618.69. The Cboe 250 was down 0.5% at 15,365.68, and the Cboe Small Companies was flat at 9,445.65.

In mainland Europe, the CAC 40 index in Paris was down 0.2%, while the DAX 30 in Frankfurt was down 0.1%.

In the FTSE 100, GVC Holdings was up 0.2% after the gambling firm said the resumption of sporting events and reopening of betting shops leave it well placed for the rest of the year.

For the half-year ended June 30, net gaming revenue was down 11% to GBP1.61 billion from GBP1.81 billion a year before, and underlying pretax profit was down 75% to GBP55.4 million from GBP212.1 million. On a reported basis, GVC swung to a pretax profit of GBP22.7 million from a GBP12.3 million loss a year before.

UK retail like-for-like net gaming revenue was down 50% to GBP277.9 million, which the company attributed to cancelled sporting events due to lockdown restrictions.

GVC scrapped its interim dividend, having paid out 17.6 pence last year, citing uncertainty brought about by Covid-19.

"The company has been busy in adapting to pandemic challenges, with the cancellation of the dividend, a suspension in marketing spend and the access to additional liquidity if required. Government schemes and business rates relief were also a boon, leading to two outcomes which represent particular achievements. Not only did the company remain cash neutral throughout lockdown, but the profit after tax figure is flat in comparison with the corresponding period last year, which is notable given the circumstances," said Interactive Investor's Richard Hunter.

At the other end of the large-cap index, a slew of stocks went ex-dividend - meaning new buyers no longer qualify for the latest payout.

Phoenix Group was the worst FTSE 100 performer, down 4.0%. Legal & General was down 2.5%, Aviva, down 2.5% and GlaxoSmithKline was down 2.2%.

In the FTSE 250, Watches of Switzerland was the best performer, up 17% after the luxury timepiece retailer said it delivered a strong performance in its maiden year as a public company.

For the financial year ended April 26, revenue was up 6% to GBP819.3 million from GBP797.7 million in financial 2019, and adjusted pretax profit was GBP49.4 million, up 86% from GBP26.5 million.

For financial 2021, Watches of Switzerland expects revenue in a range between GBP840 million to GBP860 million, on the basis of a continued strong luxury watch market in the UK and US.

The company is the biggest retailer of Swiss watch Rolex in the UK and owns the Goldsmiths and Mappin & Webb jewellers.

At the other end of the midcaps, National Express was the worst performer, down 15% after the transport company said the onset of Covid-19 had an immediate and unprecedented effect on all of its transport businesses.

For the half-year ended June 30, revenue was GBP1.03 billion, down 23% from GBP1.34 billion last year, and the company swung to a pretax loss of GBP122.2 million, from a GBP88.4 million profit last year.

Looking ahead, given the uncertainty on the duration of Covid-19, National Express said it is not currently providing profit guidance for 2020.

Meanwhile, investors are hopeful that Congress will eventually agree on a new pandemic deal despite long-running animosity between Democrats and Republicans.

However, both sides are blaming each other for the lack of progress, with Treasury Secretary Steven Mnuchin saying House Leader Nancy Pelosi would not budge unless the Democrats' demand for spending of at least USD2 trillion is met.

That is well down from the USD3.5 trillion initially proposed by Democrats but Republicans say they are unwilling to shift from their USD1 trillion plan.

"Perhaps more concerning are the 16 million jobless Americans who are longing for the next stimulus package to be passed in Congress as the stalemate continues between the Democrats and Republicans. Failure for a deal to be reached could undermine the US economic recovery. Whilst the two sides are expected to eventually cross the line, timing is everything. The longer it takes the more damage to the economy. The US dollar is back under pressure after two straight days of gains," City Index analyst Fiona Cincotta noted.

The latest US initial jobless claims figures are out Thursday at 1330 BST.

The pound was quoted at USD1.3070 Thursday morning, up from USD1.3044 Wednesday's equities close in London.

The euro was priced at USD1.1814, up from USD1.1794. Against the yen, the dollar was quoted at JPY106.70, soft from JPY106.94 in London.

Brent oil was trading at USD45.34 a barrel Thursday morning, firm from USD45.26 a barrel Wednesday evening.

Gold was quoted at USD1,931.52 an ounce, lower from USD1,948.50 an ounce at the close Wednesday.

The Japanese Nikkei 225 index closed up 1.8%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong is down 0.2%.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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