3rd Dec 2020 08:55
(Alliance News) -Â London stocks made a cautiously positive start to Thursday's session ahead of a raft of PMIs from Europe, with the key UK services sector in focus.
The FTSE 100 index was up 8.97 points, or 0.1%, at 6,472.36 early Thursday. The mid-cap FTSE 250 index was up 39.96 points, or 0.2%, at 19,917.73. The AIM All-Share index was flat at 1,066.91.
The Cboe UK 100 index was up 0.2% at 644.56. The Cboe 250 was up 0.3% at 17,213.89, and the Cboe Small Companies up 0.4% at 11,563.33.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.2% early Thursday.
"Conflicting factors are keeping a lid on the markets' generally positive direction of travel, although the S&P 500 in the US nudged ahead to another record closing high," commented Richard Hunter, head of markets at Interactive Investor.
"With an increasing amount of the vaccine optimism now being priced in, there is nonetheless more clarity with the election uncertainty having passed and with thoughts now turning to economic recovery."
Europe's economic performance will be in focus Thursday morning with a raft of PMIs due for November, a month which saw countries across the continent reimpose virus restrictions.
Ahead of the European data points, China posted strong services numbers. Figures showed China's services PMI rose to 57.8 in November from 56.8 in October. Any reading over 50 indicates expansion.
"The rate of growth was the second-quickest since April 2010, exceeded only by that recorded in June 2020. The latest reading extended the current sequence of rising business activity to seven months as the sector continued to see a strong recovery from the Covid-19 outbreak earlier in the year," said Caixin.
In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong ended up 0.7%.
In Tokyo on Thursday, the Nikkei 225 index ended flat. Against the yen, the dollar dipped to JPY104.34 versus JPY104.57 late Wednesday.
Still to come, the economic events calendar on Thursday has services PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively. In the afternoon, US jobless claims figures are at 1330 GMT.
"In the UK, November's flash estimate of 45.8 is expected to be confirmed, down from 51.6 in October as lockdown restrictions were imposed. This would be fifth straight month that activity in the sector has fallen, putting the economy on track for a double dip recession in the final quarter," said City Index's Fiona Cincotta.
The pound and euro were both higher against the dollar ahead of the data.
Sterling was quoted at USD1.3403 early Thursday, up from USD1.3343 at the London equities close on Wednesday. The euro traded at USD1.2125 on Thursday, higher than USD1.2086 late Wednesday.
In London, J Sainsbury rose 2.5%. The grocer followed rival Tesco in deciding to forgo business rates relief, but emphasised its commitment to shareholder returns.
In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would give all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the holiday intended to help companies weather the pandemic.
The supermarket noted that in the first half of its financial year, it spent GBP290 million as a result of Covid-19 and this was partially offset by GBP230 million of business rates relief.
The grocer said: "However, lockdown restrictions have remained in place for longer than originally expected and throughout the pandemic all Sainsbury's stores have been deemed essential retail. Almost all have been open and trading strongly, with the exception of a small number of convenience stores."
Sainsbury's sales and profit have been stronger than originally expected, particularly since the start of England's second national lockdown, it said, and as such it has decided to forego business rates relief on all stores.
The FTSE 100 constituent now expects underlying pretax profit of at least GBP270 million of the financial year to March, including the assumption it will forgo around GBP410 million in business rates relief.
"In the event that the business delivers profits and cash generation at least in line with its current expectations, the board believes that shareholders should not bear the full short-term financial impact this year of the business making the right decisions for customers and colleagues through the Covid-19 pandemic. Therefore, when considering free cash flow allocation this year the board will prioritise payment of dividends to shareholders over net debt reduction," Sainsbury's added.
Late Wednesday, Wm Morrison Supermarkets had said it was planning to waive its business rates for financial 2021, to the tune of GBP274 million, following rival Tesco's announcement earlier that day. On Wednesday morning, Tesco said it will repay GBP585 million of business rates relief received.
Wm Morrison was down 0.9% and Tesco up 0.8% early Thursday.
In the FTSE 250, AJ Bell rose 2.4% as the investment platform reported a profit jump in its recently ended financial year, hiking its dividend as a result.
Revenue for the financial year to September 30 rose 21% to GBP126.7 million from GBP104.9 million, with pretax profit increasing 29% to GBP48.6 million from GBP37.7 million the year prior.
"This financial performance was a result of the continued success of our platform propositions. The two key drivers of our growth, customer numbers and AUA, grew by 27% and 8% respectively in the 12-month period. The 8% increase in AUA was particularly pleasing against a backdrop of the FTSE All-Share Index falling by 19% during the same period," said AJ Bell.
Total customers increased by a "record" 63,239 in the year to 295,305, the company said.
The FTSE 250 constituent declared a final dividend of 4.66 pence, taking the total payout for the year to 6.16p, up 28%.
Gold was quoted at USD1,840.31 an ounce early Thursday, up on USD1,827.01 on Wednesday. Brent oil was trading at USD48.37 a barrel, higher than USD47.90 late Wednesday.
By Lucy Heming;Â [email protected]
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