Market report

Stocks rebound | Capricorn shares jump


5pm: Blue chips fight back

The FTSE 100 clawed back a chunk of yesterday’s losses, gaining 74 points, or 1%, to close at 7,372.

Mining and energy companies were among the biggest gainers.

Edinburgh-based Capricorn Energy, formerly Cairn Energy, saw its shares jump 6.59% to 198.9p as the FTSE 250 oil and gas company revealed production at its recently-acquired facilities in Egypt has exceeded forecasts.

The group said its Western Desert Assets pumped out roughly 36,300 barrels of oil equivalent per day on average from the time it completed the acquisition from Shell in September to the end of 2021 (more details below).

Banks including Standard Chartered, Lloyds and NatWest were among others to claw back some losses.

Royal Mail made gains after confirming its own restructuring, which is set to hit 700 management jobs. Shares closed 5.7p higher at 442.3p after bosses confirmed the plans were designed to help reduce Royal Mail’s costs by about £40 million a year.

Moving lower was Unilever, which slipped 0.2% after the consumer products maker revealed plans to slash about 1,500 management jobs.

Sterling edged 0.05% higher against the US dollar to $1.349, and dropped 0.05% against the euro to €1.195.

Brent crude increased by 1.67% to $87.71 per barrel when the London market closed.

12.30pm: AssetCo seals R&M deal

Martin Gilbert’s consolidation vehicle AssetCo has agreed the terms of a near £100m all-share purchase of River and Mercantile and its £4.2bn of client assets.

Full story here

7am: Capricorn’s Egyptian boost

Capricorn Energy

Oil and gas explorer Capricorn Energy – formerly Cairn Energy – said production growth at its newly acquired Western Desert Assets in Egypt beat expectations.

In the UK, the FTSE 250-listed Edinburgh firm said it had concluded all necessary steps under India taxation rules for the payment of a tax refund of approximately £784.66m – expected to be made in early 2022.

The company said that $500m will be returned to shareholders by way of tender offer, while $200m will be returned via an ongoing share repurchase programme to provide a continuing value-accretive return of capital to shareholders.

Chief executive Simon Thomson said: “We are very encouraged by the initial operating performance of our newly acquired Western Desert Assets in Egypt, with production growth ahead of expectations. We look forward to accelerating cash flows from the assets whilst reducing their emissions profile.

“With balance sheet strength and financial flexibility, Capricorn enters 2022 positioned to make another significant capital return to shareholders with the company having concluded all required steps to enable payment of the India tax refund.”

7am: Marston’s hit hard in Scotland

Pub group Marston’s said its outlets in Scotland and Wales were more significantly impacted than those in England by the tighter restrictions that were enforced during the 16 weeks to 12 January.

The group has 21 pubs and inns in Scotland including the Queen of the Loch in Balloch, Pine Marten in East Lothian, and Sweet Chestnut in Dunfermline. 

Total like-for-like sales for the period fell 3.9% against the same period in 2019 reflecting the impact of the Omicron variant.

Andrew Andrea, CEO, said: “We welcome the various plans underway to gradually ease trading restrictions in Scotland and Wales.  These, together with the reduction in the required self-isolation period and anticipation of an imminent end to the work from home directive, should enable some semblance of normalised trading patterns to return.”

7am: Public debt

Public sector net borrowing came in at £16.8bn in December, £7.6bn lower than a year earlier.

For the first nine months of fiscal year 2021-2022 the data shows borrowing of £146.8bn, which is £13bn lower than the Office for Budget Responsibility’s forecast.

Surging inflation meant interest payments on the debt hit a record £8.1bn.

The cost of servicing the country’s £2trn+ debt pile was almost 200%, or £5.4bn, up on December 2020.

Chancellor Rishi Sunak said:  “We are supporting the British people as we recover from the pandemic through our Plan for Jobs and business grants, loans and tax reliefs.  

“Risks to the public finances, including from inflation, make it even more important that we avoid burdening future generations with high debt repayments.

“Our fiscal rules mean we will reduce our debt burden while continuing to invest in the future of the UK.”

Global markets

Asian equity markets tumbled as political tensions rose over Russia’s decision to send troops to the Ukraine border.

Japan’s Nikkei 225 index fell 1.7%., while the Shanghai Composite in China was down 1.9% and the Hang Seng index in Hong Kong was down 1.6%.

Brent oil was quoted at $87.05 a barrel Tuesday morning, up sharply from $85.51 late Monday.

Wall Street shrugged aside early session fears to buy back into riskier assets and away from defensive stocks.

Investors had been fretting over the Ukraine situation and Wednesday’s Federal Reserve meeting which is expected to shed some light on the central bank’s plans for further policy tightening.

But after early falls the Dow Jones and the S&P 500 both closed up 0.3%. The Nasdaq ended up 0.6%, or 13.6% below its 19 November record after dipping more than 18% below it earlier in the day.

The FTSE 100 index closed 196.98 points (2.63%) lower at 7,297.15 – its biggest one-day fall since the end of November when the emergence of the Omicron variant prompted widespread selling.

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