13th Jan 2021 12:20
(Alliance News) - Stock prices in London were mixed at midday on Wednesday as fears about the spread of the coronavirus become more prevalent, while Democrats prepare to impeach US President Donald Trump for a second time.
The coronavirus mutation first found in the UK has now spread to 50 territories, according to the World Health Organization, while a similar South African-identified strain has now been found in 20.
The UN body also noted a third new coronavirus "variant of concern" found in Japan may impact upon immune response and needs further investigation.
"The more the SARS-CoV-2 virus spreads, the more opportunities it has to change. High levels of transmission mean that we should expect more variants to emerge," said WHO.
UK Prime Minister Boris Johnson and health chiefs will be questioned on the rollout of vaccines after warnings to abide by lockdown restrictions were stepped up to ease pressure on the NHS. The PM will be grilled by senior members of Parliament on the liaison committee after facing Labour leader Keir Starmer during PMQs on Wednesday.
The FTSE 100 index was down 5.00 points, or 0.1%, at 6,749.11 at midday Wednesday. The mid-cap FTSE 250 index was down 53.89 points, or 0.3%, at 20,659.07. The AIM All-Share index was down 0.1% at 1,177.42.
The Cboe UK 100 index was flat at 672.39. The Cboe 250 was down 0.6% at 17,910.11, and the Cboe Small Companies was up 0.7% at 12,303.56.
In Paris, the CAC 40 was up 0.1%, while Frankfurt's DAX 30 was 0.1% lower.
"There is a lack of catalysts, and investors are waiting for the US earnings season to begin, which will hopefully help stocks gain momentum again," commented Axi's Milan Cutkovic. "Meanwhile, the mood in Europe is slightly more subdued. The number of new COVID-19 cases is increasing rapidly, and lockdowns across the continent are likely to be extended for several more weeks."
In the FTSE 100, supermarkets J Sainsbury and Wm Morrison Supermarkets were up 2.8% and 1.9% respectively, after French peer Carrefour was subject to bid interest.
The French grocer said it has been approached, "in a friendly manner", by Canada's Alimentation Couche-Tard Group, over a combination project, but stressed discussions were preliminary. Carrefour shares were up 14% in Paris.
"The waves from any Carrefour/Couche-Tard tie-up may lap up against British shores quite gently. That being said though, the Issa Bros/TDR (private equity) are in the process of buying the majority of the equity in No.3 British grocer, Asda, from Wal-Mart. With so much low priced money in the system we can, therefore, expect more such activity, especially for asset backed and defensive entities," Shore Capital's Clive Black said.
"To complete the blue sky thinking, Amazon may yet seek to follow the path it has taken in the US, where it acquired Whole Food Markets for USD14bn in order to gain a real foot hold in the grocery market. We would not rule out a similar step in time in the UK, should it seek to become a serious player, noting its investment in Deliveroo in 2020; Amazon and Wm Morrison Supermarkets have a formal commercial relations."
At the other end of London's large-cap index, Persimmon was the worst performer, down 5.2% after the housebuilder reported a fall in revenue for 2020, as it faced tough challenges due to the Covid-19 pandemic.
For the year, the housebuilder posted revenue of GBP3.3 billion, down 8.8% from GBP3.65 billion recorded for 2019. New home completions totalled 13,575, down from 15,855 the year prior. However, average selling price rose to around GBP230,500 from GBP215,709.
Dividends paid in 2020 were down 53% to 110 pence from 235p in 2019.
Looking ahead, the York-based company warned that while the vaccine rollout has commenced, uncertainties surrounding the potential impact of the pandemic remain, especially in relation to unemployment levels and consumer confidence. It also expressed concern about the potential impact of an end to the stamp duty holiday in the UK, due at the end of March.
"At this stage, with the end of the stamp duty holiday in sight, taking a cautious view of the immediate outlook is the right approach, but we have seen more bullish outlooks from some of the group's rivals," said Hargreaves Lansdown's Steve Clayton.
Just Eat Takeaway was the second worst performer, down 4.1%, after the online food ordering platform said it would be investing heavily in its delivery services.
For the fourth quarter, total orders were 179.8 million, up 57% from 114.9 million orders in the fourth quarter of 2019. For the full year 2020, Just Eat expects revenue growth of more than 50%, with adjusted earnings before interest, tax, depreciation, and amortisation margin of 10%, after the significant investment made in delivery in the quarter.
"A big increase in the number of couriers employed directly by the company will bring with it increased costs, taking Just Eat further away from its original capital light model where it just provided an online platform for restaurants. The investment in ramping up delivery capability is reflected in the margin pressure revealed by today's trading update. There is a firm signal that management will prioritise market share over profitability for the time being at least," said AJ Bell's Russ Mould.
Just Eat also said its acquisition of peer Grubhub in the US should be completed during the first half of this year. Due to that acquisition, it said it is reviewing the listing venues for its shares, as they now will need to be listed in the US as well. As a result, it said it will delay its planned delisting from Euronext Amsterdam and will remain listed in both London and Amsterdam for the time being.
The pound was quoted at USD1.3657 on Wednesday at midday, up from USD1.3621 at the London equities close Tuesday. Sterling hit a high of USD1.3701 versus the greenback in early trade, as investors eye a return to the USD1.40 mark.
Sterling was continuing to rise after the Bank of England on Tuesday poured cold water on the prospect of negative UK interest rates.
"With the pound starting to look strong at the start of this year, I reckon it could be among the best-performing major currencies in the months ahead now that a no-deal Brexit has been avoided. With the UK also being among the first countries to roll out the Covid vaccines, this could see the economy rebound sharply once lockdowns end, providing sterling an additional boost," commented ThinkMarkets analyst Fawad Razaqzada.
The euro was priced at USD1.2175, up from USD1.2157. Against the yen, the dollar was trading at JPY103.97, down from JPY104.18.
Brent oil was trading at USD56.63 a barrel at midday, flat from USD56.61 late Tuesday. The North Sea benchmark was retreating from a fresh 11-month high of USD57.41 reached in early trade.
Gold was quoted at USD1,852.02 an ounce, higher against USD1,844.07.
Wall Street was pointed to a mixed start as Democrats push ahead with impeachment proceedings against US President Donald Trump after Vice President Mike Pence refused to invoke the 25th amendment to remove Trump from office.
The Dow Jones Industrial Average was called flat, the S&P 500 down 0.1% and the Nasdaq Composite up 0.1%.
Trump rejected blame Tuesday for a deadly assault on Congress by his supporters, but cracks emerged in the president's Republican support with several now backing his removal on the eve of an all-but-certain historic second impeachment by the Democrat-controlled House of Representatives.
According to The New York Times, the powerful Senate majority leader, Senator Mitch McConnell, has said privately he believes Trump did commit impeachable offences. In the House, the number three Republican Liz Cheney said she would be voting to impeach, and called Trump's actions "a betrayal" of his office.
By Arvind Bhunjun; [email protected]
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