ADVFN Morning London Market Report: Wednesday 25 November 2020

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London open: Stocks edge higher ahead of spending review


London stocks edged higher in early trade on Wednesday as investors eyed Chancellor Rishi Sunak’s spending review.

At 0840 GMT, the FTSE 100 was up 0.3% at 6,449.45p.

Overnight, the Dow closed above 30,000 for the first time, lifted by the prospect of a smooth transition to power by US President-elect Joe Biden and reports that former Federal Reserve Chair Janet Yellen is his top pick for Treasury Secretary. The S&P 500 also hit a fresh record high.

CMC Markets analyst Michael Hewson said: “Another record day for US stocks and a fresh 29-year high for the Nikkei225 has seen markets here in Europe open modestly higher this morning as momentum begins to show signs of slowing ahead of tomorrow’s US Thanksgiving holiday.

“Over the past week or so the outlook for stocks, as well as the global economy, has brightened considerably as the prospect of a number of vaccines, along with, what looks like a relatively seamless transition of power in the US has prompted a bout of optimism that a pathway to recovery is opening up.

“Despite this brighter outlook, the path there continues to look long and arduous. French President Emmanuel Macron announced a modest relaxation to France’s lockdown, however there was huge disappointment for bars and restaurants who were told they would have to remain closed until 20th January. In the UK, the government here also outlined a three-tier system of rules in the lead-up to Christmas which in turn received some criticism from various parts of the hospitality sector.”

All eyes will be on Sunak’s spending review later in the day.

“The Chancellor is already on track to spend over £400bn this fiscal year alone in tackling the pandemic,” said Hewson. “Today he is expected to outline further measures to support the economy spend £4.3bn on supporting the newly unemployed back to work. The primary focus is likely to be on infrastructure, particularly in the hardest hit areas with a focus on green initiatives like battery factories, wind farms.”

In equity markets, GKN owner Melrose rallied after saying it was trading at the top of board expectations, although it also struck a cautious note about the outlook. Aerospace sales fell 37% in the four months to the end of October but the automotive and metallurgy business picked up with an improving trend. Nortek Air Management revenue rose 13%.

United Utilities rose as it lifted its interim dividend despite posting a drop in profit, while animal genetics company Genus gained after saying it is likely to perform ahead of its previous profit growth expectations for the financial year 2021.

Industrial flow control equipment maker Rotork was also in the black as it said 2020 adjusted operating profit is set to be at or slightly above, the top end of the range of current market expectations.

On the downside, defence company Babcock International slid as it reported a decline in full-year profit and revenue as costs rose due to the Covid-19 pandemic.

Virgin Money was also weaker after it posted a slump in underlying profits after taking a £501m impairment charge as Britain’s economy braces for the coronavirus crisis fallout.

Media platform Future lost ground after announcing it has agreed to buy GoCo in a deal that values the GoCompare owner at 136p a share, and reporting a jump in full-year profit and revenue.


Top 10 FTSE 100 Risers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Melrose Industries Plc +3.16% +5.15 168.30
2 United Utilities Group Plc +3.08% +27.60 923.80
3 Fresnillo Plc +2.19% +23.00 1,071.00
4 Burberry Group Plc +2.14% +36.00 1,720.50
5 Johnson Matthey Plc +2.03% +46.00 2,307.00
6 Ocado Group Plc +1.87% +40.00 2,183.00
7 Hsbc Holdings Plc +1.85% +7.40 407.05
8 Hikma Pharmaceuticals Plc +1.65% +43.00 2,644.00
9 Compass Group Plc +1.63% +22.50 1,399.50
10 Dcc Plc +1.58% +88.00 5,646.00


Top 10 FTSE 100 Fallers

Sponsored by
76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Prudential Plc -2.51% -31.50 1,225.50
2 Legal & General Group Plc -2.50% -6.80 265.10
3 Barclays Plc -2.26% -3.40 146.80
4 Tui Ag -1.87% -10.20 536.40
5 Rio Tinto Plc -1.80% -91.00 4,962.00
6 British Land Company Plc -1.76% -8.60 480.70
7 Land Securities Group Plc -1.69% -12.10 702.80
8 Lloyds Banking Group Plc -1.65% -0.65 38.85
9 Evraz Plc -1.63% -6.60 397.90
10 Barratt Developments Plc -1.55% -10.00 634.80


Wednesday newspaper round-up: Debenhams, pubs, retailers

The government has privately admitted the UK faces an increased likelihood of “systemic economic crisis” as it completes its exit from the European Union in the middle of a second wave of the coronavirus pandemic. A confidential Cabinet Office briefing seen by the Guardian also warns of a “notable risk” that in coming months the country could face a perfect storm of simultaneous disasters, including the prospect of a bad flu season on top of the medical strains caused by Covid. – Guardian

Up to 60 Debenhams shops could close next year, putting thousands of jobs at risk, as part of a rescue deal for the beleaguered department store group. Shares in JD Sports fell more than 6% on Tuesday after it emerged the company was in exclusive talks to buy Debenhams, in a move that would take the sports and casual wear group into a tough new market. – Guardian

Pubs risk losing sales worth £1.5bn in December alone as Boris Johnson’s tough new regional tier system looks set to deliver a further blow to the beleaguered sector, industry chiefs warned. When England’s lockdown ends on 2 December, pubs operating in tier two will only be allowed to serve customers alcohol if they also order a substantial meal, while whose in tier three can only operate for takeaway sales. – Telegraph

Councils have been handed tough new powers allowing them to shut down businesses for up to a week for flouting Covid rules, Downing Street has announced. Business leaders warned against a “heavy-handed” approach to the “incredibly stringent” powers that will help local authorities tackle firms failing to make their premises Covid-secure. – Telegraph

Retailers that paid out dividends after a boost in sales during lockdown are under growing pressure to hand back millions of pounds of taxpayer support after the boss of AO World said that executives “should go and ask their mum if she would be proud”. John Roberts, 47, said that the online electricals retailer had returned business rates relief and furlough cash after sales and profits had boomed during the pandemic. – The Times


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