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Shares dip as markets await financial services deal

City of London

London closed lower and with questions over its future (pic: Terry Murden)

London’s stock market ended the final trading day of the year, and the last tied to EU rules, with uncertainty hanging over the future of trading and the financial services.

The FTSE 100 closed the truncated session 95 points lower at 6,460, a level last seen in July 2016 and marking its worst year since the 2008 financial crisis. The top index has lost 15% of its value since January.

While the FTSE 100 is not representative of the UK economy, the London market has underperformed compared with the US, especially after Wall Street repeatedly hit record highs.

The mid-cap FTSE 250 index, considered a closer barometer of Brexit sentiment, was down 1.1%, ending the year 6.4% lower.

Travel and housing were the hardest hit on New Year’s Eve as it is unclear how Brexit will hit the UK economy.

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However, the focus has switched to financial services which accounts for 80% of the UK economy but has received little attention in Brexit negotiations.

Josh Mahony at IG took an optimistic view of the year ahead now that Brexit is done and Covid vaccines give hope that the pandemic will soon end.

“UK businesses are looking towards Spring as a target to blossom once again,” he said. “The current April deadline to end the furlough scheme coincides with Matt Hancock’s prediction that the UK could be out of this crisis by spring, with the vaccine roll-out boosted by the news that the AstraZeneca inoculation effort begins next week.”

In a thin day for corporate news, shares in estate agent Countrywide jumped 12.9% after it accepted realty management firm Connells’ sweetened buyout offer that gives it an enterprise value of about £223.1 million.

Countrywide’s portfolio includes the Slater, Hogg and Howison business.

ALK Capital, a US investment fund run by former Citigroup and Lehman Brothers staffer Alan Pace, has acquired a major stake in Premier League football club Burnley.

New Burnley owners: ALK Capital Partners Stuart Hunt, Alan Pace and Mike Smith (pic: Burnley FC)

ALK has agreed to buy a 84% holding in the Lancashire club through its sports investment arm Velocity Sports Partners. The club’s existing shareholders, including former chairman Mike Garlick and director John Banaszkiewicz, will remain on the board.

Primark owner AB Foods said that in response to the further lockdowns in in the UK and Ireland 253 of its stores will be temporarily closed, representing 64% of its total retail selling space, with the announced periods of closure varying by market.

AB Foods said: “Our estimated loss of sales for these stores for the announced periods of closure in our financial year is now some £650m, up from £430m announced on December 4.”

Primark

Primark expects higher losses (pic: Terry Murden)

The company added that it will provide an update on trading for both Primark and its other businesses in January as scheduled.

Rail and bus company FirstGroup said it has sold three properties held by its inter-city Greyhound coach business in the US.

The Aberdeen-based company said it will yield a profit of about £73 million from the trio of transactions. The cash proceeds will be used for “general corporate purposes”.



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