LONDON MARKET OPEN: Wetherspoon Falls After Swinging To Loss

(Alliance News) - Stock prices in London opened higher on Friday staging a rebound following Thursday's sell-off, while shares in JD Wetherspoon fell after the pub chain swung to an annual loss.

The FTSE 100 index was up 78.31 points, or 1.1%, at 5,910.83 early Friday. The large-cap index ended 1.7% lower at 5,832.52 on Thursday.

The mid-cap FTSE 250 index was up 89.61 points, or 0.4%, at 17,928.06. The AIM All-Share index was up 0.4% at 975.74.

The Cboe UK 100 index was up 1.3% at 586.32. The Cboe 250 was up 0.8% at 15,160.61, and the Cboe Small Companies flat at 9,371.27.

In mainland Europe, the CAC 40 index in Paris was up 1.4% and the DAX 30 in Frankfurt was up 0.4%.

On the London Stock Exchange, fashion house Burberry Group was the best blue-chip performer, up 4.2%, benefitting from a positive read-across from French peer LVMH Moet Hennessey Louis Vuitton.

LVMH late Thursday reported improving trends in the third quarter. The Louis Vuitton and Christian Dior owner reported revenue of EUR30.3 billion in the first nine months of 2020, down 21% on a year ago on both a reported and organic basis.

In the third quarter, revenue was down 7% organically, reflecting a "marked improvement" in trends versus the first half.

"The encouraging signs of recovery observed in June for several of the group's activities were confirmed in the third quarter in all regions, notably in the United States, and in Asia, which once again grew over the period," said LVMH.

LVMH shares were up 4.7% in Paris, hitting a record high in early trade.

Whitbread was up 2.5% after Berenberg raised the Premier Inn hotel chain owner to Buy from Hold.

At the other end of the large caps, British Airways-owner International Consolidated Airlines was the worst performer, down 1.0%. The UK government late Thursday dealt a fresh blow to holidaymakers by adding Italy to its quarantine list.

This means that travellers returning to the UK from Italy, Vatican City and San Marino as of 0400 BST on Sunday must self-isolate for two weeks.

In the FTSE 250, Serco Group was the standout performer, up 15% after the outsourcer upgraded its earnings guidance.

In an unscheduled trading update, the outsourcer said it expects full-year revenue to be around GBP3.9 billion and underlying trading profit in a range between GBP160 million to GBP165 million.

In financial 2019, Serco reported revenue of GBP3.24 billion and underlying profit of GBP120.2 million.

Serco said all of its regions worldwide are performing better than expected and have increased their forecasts for 2020. At both group level and in the divisions, effective cost control and the ability of systems to respond efficiently to increased demand has helped increase margins, it said.

At the other end of the midcaps, JD Wetherspoon was the worst performer, down 4.8% after the pub chain swung to an annual loss and skipped its dividend.

The Tim Martin-founded pub chain took aim at the UK government's handling of the coronavirus crisis and the ramifications this has had on the pub industry.

For the financial year ended July 26, the FTSE 250 pub chain swung to a pretax loss of GBP34.1 million before exceptional items from a GBP102.5 million profit the year prior. After exceptional items and application of the IFRS 16 accounting rule for leases, Wetherspoon swung to a loss of GBP105.4 million. Revenue fell 31% to GBP1.26 billion from GBP1.82 billion, with like-for-like sales down 30%.

Wetherspoon said like-for-like sales in the first 11 weeks of the new financial year have been 15% below those of last year, with strong sales in the first few weeks, followed by a marked slowdown since the introduction in the UK of a curfew - which causes pubs and restaurants to close at 2200 BST.

The pub chain skipped its annual dividend, having paid out 12.0 pence the year before.

Chair Martin said that, as a result of recent changes in regulations, the outlook for pubs over the remainder of the current financial year is "even more unpredictable".

"It appears that the government and its advisers were clearly uncomfortable as the country emerged from lockdown. They have introduced, without consultation, under emergency powers, an ever-changing raft of ill-thought-out regulations - these are extraordinarily difficult for the public and publicans to understand and to implement. None of the new regulations appears to have any obvious basis in science," Martin complained.

The Japanese Nikkei 225 index ended down 0.4% Friday. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong is up 1.0%.

The pound was quoted at USD1.2912 Friday morning, lower from USD1.2926 at the London equities close Thursday.

UK Prime Minister Boris Johnson is due to set out whether trade talks with the EU should continue after his deadline for reaching an agreement passed without a deal in place.

David Frost, the chief negotiator, said the UK was "disappointed" by the outcome of a EU summit in which the bloc signalled it was willing to continue trade negotiations but called on Britain to make the next move.

Frost said the prime minister would set out his response on Friday.

The euro was priced USD1.1707, flat from USD1.1705 at the European equities close Thursday. Against the yen, the dollar was trading at JPY105.32, flat from JPY105.30.

Brent oil was quoted at USD42.74 a barrel Friday morning, up from USD42.58 late Thursday. Gold was quoted at USD1,906.78 an ounce, up from USD1,904.50.

The economic calendar for Friday has eurozone inflation figures at 1000 BST and US retail sales at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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