Market report

Ryanair shuts Frankfurt | Aston Martin ‘setback’ | house prices


5pm: London calm despite US jobs data

The FTSE 100 dipped at the open but closed 34.91 points higher at 7,485.28, bucking a decline in US stocks as inflation, looming interest rate hikes and weak jobs report spooked investors. 

Although the addition of 199,000 jobs was well below expectations, previous months’ numbers were revised upwards and the unemployment rate fell.

In London’s equity market, miners gained as metals price rose, with Rio Tinto up 2.64%, Anglo American rising 2.94%, BHP ahead 2.69%, and Antofagasta 1.88% higher.

Shell edged up 1.05% after it said its $7bn share buyback programme would continue “at pace” despite weaker oil product sales due to the Omicron variant, and currency headwinds in Turkey.

Fellow oil giant BP rose 2.08% after an upgrade to ‘outperform’ at Exane.

10am: Ryanair shuts Frankfurt base


Ryanair is closing its base in Frankfurt at the end of March, claiming high airport fees.

All Ryanair flights to and from Frankfurt, Germany’s busiest airport, from 31 March have been cancelled, said the Irish carrier.

Pilots and crew based at Frankfurt will be able to apply for jobs elsewhere in the Ryanair network.

The Dublin-based airline said it was still investing in its German operations, including a $200m investment in a new base in Nuremberg with two aircraft.

Frankfurt airport operator Fraport said it had introduced an “extremely moderate” increase in fees which many partners see as fair.

“Everyone is treated equally, there are no special rights,” a spokesperson said.

9.40am: Aston Martin missing a gear

Russ Mould, investment director at AJ Bell, says Aston Martin Lagonda seems to be hoping for the type of comeback that the James Bond franchise achieved when Daniel Craig brought a new spark to the film series in 2006.

“The company declares that it’s been a ‘very long time’ since the core business was as healthy as it is now. That’s a bold statement given the rocky road it has travelled since being a listed business, and even beforehand. Let’s hope management doesn’t live to regret such a bullish comment, given Aston Martin has form for disappointing shareholders.

“Since floating in 2018, the company has stomached large debts with high rates of interest, it has suffered multiple profit warnings, become embroiled in a legal dispute which caused a hit to earnings and cash flow, and saw too many cars sitting in dealer showrooms. The story sold to investors at the IPO certainly didn’t live up to the hype.

“More recently Aston Martin has seen wholesale volumes pick up, its DBX SUV model has been a welcome hit, and its selling prices have improved. Unfortunately, the company still can’t shake the habit of delivering some sort of bad news every time it updates the market.

“The latest setback effectively adds up to another profit warning, whereby it shipped fewer Valkyrie vehicles than planned during the fourth quarter. The company says this is only a timing issue as it already has buyers lined up, hence why the share price has not collapsed on the news.

“Nonetheless, this setback reinforces the message that Aston Martin still seems incapable of running smoothly as a business.”

See company trading update below.

9am: Builders benefit from homes report

Housebuilder Taylor Wimpey edged 0.3% higher after the Halifax House Price Index suggested the average UK property price hit a new high of £276,091 in December.

The mortgage lender said the average house price increased by more than £24,500 in 2021, making it the largest annual increase since 2003.

Halifax expects house price growth to slow in 2022.

Energy giant Shell dipped 0.1% to 1718p after saying the remaining $5.5 billion of proceeds from the Permian divestment will be distributed in the form of share buybacks “at pace” (see below).

The FTSE 100 was treading water ahead of the US jobs report later today. The index was just 4.74 points higher at 7,455.11

8am: Nucleus buyer ‘looking to sell stake’

A private equity firm behind the merger of James Hay and Edinburgh-based Nucleus Financial is said to be looking to sell at least a part of its stake in the platforms.

Full story here

7am: Aston Martin Lagonda delivering to plan

Aston Martin Valkyrie

Aston Martin Lagonda said the “game-changing” Valkyrie hypercar programme is in production and deliveries to customers have commenced.

Ten vehicles were shipped in Q4. This was fewer than previously planned and accordingly, adjusted EBITDA is anticipated to be c.£15m lower than expected.

“The impact is timing only, all Aston Martin Valkyrie Coupes are sold and remain allocated to customers with significant deposits,” said the company.

Executive chairman Lawrence Stroll said: “I am extremely pleased that our core business has delivered to plan with over 6,000 core wholesales in the year whilst driving inventory to levels that are appropriate for an ultra-luxury business.

“The evidence is there that our strategy is working, as retail sales are well ahead of wholesales supported by strong pricing and improving residual values. It is a very long time since the core business was in such good health as it is today.”

Tobias Moers, chief executive, added: “Our core business delivered as planned while navigating a challenging external operating environment

“With the DBX having achieved about 20% share of the luxury SUV market I am pleased that we also successfully launched the DBX straight-six in China in November as planned, creating opportunities for 2022.

“With a full year of Aston Martin Valkyrie programme deliveries in 2022 we are expecting to deliver significant growth, in addition to the launch of our second DBX derivative, intended to disrupt the performance luxury SUV market and the final edition of the V12 Vantage.” 

7am: Shoppers stay away

Empty TopShop

Shopper footfall in Scotland plummeted 22.8% in December on the same month in 2019, prompting further calls for incentives along the lines being offered in Wales and Northern Ireland. Footfall in Scottish shopping centres was down by almost a third (31.9%).

David Lonsdale, director of the Scottish Retail Consortium, said: “It rounded off a profoundly worrying ‘golden quarter’ for Scottish shopkeepers, many of whom traditionally need strong pre-Christmas trading in order to tide them over the fallow winter months.

“It heralds an unnerving start to the new year for many retailers. Scottish Ministers must stand ready to support the retail industry further if these conditions are set to persist, through grants for shops as their Welsh counterparts are offering, scrapping the cap on the business rates relief announced in the Budget, or through a high street stimulus scheme like Northern Ireland has implemented.”

7am: C&C hikes prices

Tennent’s owner C&C Group said prices of drinks had risen to manage inflationary cost pressures and trading in Q3 (September to November) was modestly ahead of expectations and the stated guidance.

The Dublin-based company said it generated a modest profit in December and the operating profit outcome for the H2 FY2022 period will be affected by the nature, extent and duration of government restrictions.

Consequently, C&C will provide an updated operating profit range in its FY2022 pre close trading statement in March.

7am: Shell buybacks

Oil and gas company Shell said the remaining $5.5 billion of proceeds from the Permian divestment will be distributed in the form of share buybacks at pace.

These are in addition to the distributions of 20-30% of cash flow from operations as per its existing capital allocation framework.

Further details of the amount and pace of total shareholder distributions will be disclosed at the fourth quarter results announcement.

Global markets

The FTSE 100 was expected to open little changed as traders await jobs data from the US for December.

CMC’s Michael Hewson says expectations are for December payrolls to improve to 420,000, and the unemployment rate to fall further to 4.1%, although some estimates for payrolls have come in as high as 900m.

“It will certainly need to see a decent number to help push the US dollar up from current levels, and don’t forget to keep an eye out for an upward November revision,” he said.

“Ultimately, today’s number is unlikely to make that much difference to how investors view the potential timing of the first US rate rise.”

US markets were weak, with the Dow Jones declining 171 points and the S&P 500 dipping 5 points.

Japan’s Nikkei 225 is trading around 9 points lower while in Hong Kong the Hang Seng is 371 points higher.

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