Market report

Artisanal ahead | Kier orders rise | Scottish Mortgage raises funds


5pm: Market dragged down by oil price dip

The FTSE 100 closed 4.675 points lower at 7,585.01 as banks, miners and oil stocks that make up the index’s heavyweights fell back for a second day.

“London’s blue-chip index looked slightly out of kilter compared to Wall Street and other European markets today,” said Danni Hewson, financial analyst at AJ Bell.

“After a strong start boosted by miners reacting to news from China, a fall in the price of oil and mixed bag of other updates dragged it down into negative territory, but not by much.”

Brent crude was flat at $88.67 a barrel at the equities close, unmoved from $88.68 at the close Wednesday. 

“People are returning to the office and with their return comes a boost for public transport, cafes, restaurants and all those other city centre businesses that rely on commuters. Trainline, Wetherspoons and Whitbread have made gains today as have travel stocks; TUI, EasyJet, Wizz Air, IAG all on the up as life moves on despite the dampening push of rising prices.

The top gainer was Pearson, which rose by 3.5% to 693p. 

9.15am: China’s rate cut

China’s central bank continued to buck global trends by cutting a key mortgage rate.

“China has often found itself at odds with the rest of the world economically over the last two years, perhaps unsurprisingly given it was the first country to be hit by the Covid-19 pandemic,” said AJ Bell investment director Russ Mould.

“Its efforts to revive a struggling property sector by relaxing monetary policy, at a time when the likes of the Bank of England and Federal Reserve are in rate-hiking mode, should probably be seen in this context.”

Mining stocks and Burberry, which has substantial exposure to China, got a lift off the back of the news.

The FTSE 100 got an immediate lift, but after an hour was trading in negative territory, down 25.72 points at 7,563.94.

Takeaway platform Deliveroo, which has endured a troubled start to life as a public company in the wake of a disastrous IPO last March, announced strong fourth quarter sales growth.

“The effective lockdown conditions created by Omicron undoubtedly helped but with restrictions starting to be lifted, this supportive trend is rapidly moving into the rear-view mirror.” said Mould.

“Already dealing with the pressures of an extremely competitive market, Deliveroo now faces the prospect of a cost of living squeeze which may weaken appetite for ordering takeaways on such a regular basis.”

7am: Artisanal Spirits Company

Scotch Malt Whisky Society

The company, which owns the Scotch Malt Whisky Society, expects to report full year revenue of approximately £18m (FY 2020: £15m) comfortably ahead of market expectations, with both UK and international sales growing by around 20%.

It has seen a 15% growth in global membership, a key indicator of future revenue growth, in second half of the year (more than 33,000 at year end, up from 28,700 at 30 June).

UK and International members grew by approximately 20% and 15% respectively over the year as a whole.

The board said it is confident that the new financial year will see ASC deliver further “meaningful revenue growth”.

David Ridley, executive managing director, said 2021 was a “transformational year” and sales growth was consistently strong and the admission to AIM was a “step-change in our development”.

He said: “The early fruits of this step-change can be seen in the material acceleration in overall membership growth in the second half.”

7am: Primark axes in-store staff

Primark said in-store management structure will be “simplified” as part of an ongoing programme to improve efficiency, said parent group Associated British Foods. It is cutting 400 jobs.

Fourth quarter sales rose 36% and it is on track to launch an improved customer-facing website in the UK by the end of March, and across all its markets by the autumn.

Full story here

7am: Scottish Mortgage raises $400m

Scottish Mortgage Investment Trust has raised $400m in long-term borrowings through the issue of three loan notes.

The first note, for $175m, is for 30-years and carries a coupon of 2.99%; the second, which is repayable in 35 years time, is for $110m and carries a coupon of 3.04% while the third is a 40-year note with a coupon of 3.09%.

“Once again the company has issued long-term private placement debt at attractive rates. This is reflective of the enduring strength of Scottish Mortgage’s proposition and should enhance shareholders’ returns over the coming decades,” said Fiona McBain, the chairman of Scottish Mortgage.

7am: Kier

Kier said its order book at 31 December 2021 was c.£8bn, an increase of c.4% from the year-end position (FY21: 7.7bn).

The order book continues to be underpinned by significant long-term framework agreements. New awards exceeded the prior year, albeit the growth in order book was later than anticipated due to procurement delays.

Chief executive Andrew Davies said: “The performance of the group over the last six months reflects our significantly enhanced resilience and strengthened financial position. The first half of the year has started well and we continue to trade in line with our expectations.”

7am: AJ Bell

Investment platform AJ Bell said total customer numbers increased to 398,066, up 27% over the last year and 4% in the quarter, with total net inflows in the quarter of £1.3 billion.

Total assets under administration increased to £75.6 billion, up 21% over the last year and 4% in the quarter. Over the same quarter the FTSE All-Share Index rose by 3.7%.

Global markets

Stocks in London were expected to shrug off another Wall Street tumble last night and build on recent gains.

Wall Street ended lower, with the Dow Jones Industrial Average and S&P 500 both closing 1% lower, while the Nasdaq Composite was down 1.2%.

In China, the Hang Seng index in Hong Kong soared 2.9% after China further reduced bank lending costs in the latest move to boost its stuttering economy. The People’s Bank of China said it had lowered the one-year loan prime rate to 3.7%, from 3.8% in December. However, the Shanghai Composite was down 0.1%.

Japan’s Nikkei 225 index ended up 1.1%.

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