The FTSE 100 ended Monday with a 1.4% gain at 5,654, helped by a weaker pound. The currency fell 0.4% to $1.2904 following slow progress on Brexit talks, the threat of the Bank of England setting negative interest rates on Thursday and the prospect of a contested outcome from the US election.

The more UK domestically focused FTSE 250 fell by 0.2% as investors worried about the impact of a new England-wide lockdown on the economy. Retail, pub and leisure stocks generally struggled as the market contemplated the prospect of weaker near-term earnings. Ted Baker (TED) dropped 13%, Superdry (SDRY) traded 9.2% lower and Marston’s (MARS) fell 9%.

LOCKDOWN DEVELOPMENTS

Primark owner Associated British Foods (ABF) reversed earlier losses to trade 1.4% higher at £17.02 despite warning of a £375 million loss on Primark sales on temporary store closures following new lockdowns implemented across Europe and the proposed lockdown in England.

Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia were temporarily closed, which represented 19% of its total retail selling space.

Gambling company GVC (GVC) dropped 3.4% to 933p after it warned on performance following enforced store closures across UK and European retail amid further coronavirus lockdown measures.

The company estimates the impact on EBITDA of currently required retail closures at £37 million, while the impact on EBITDA if all retail outlets were to be closed for a month would be £43 million.

Budget airline Ryanair (RYA) gained 3.8% to €12.44 despite posting a loss for its key summer period for the first time in decades and warning the coronavirus crisis could force further cuts and leave capacity next summer as little as half of normal levels. The market likes the news that the airline would not issue any refunds to people unable to travel due to November’s lockdown restrictions because it said the planes would still be flying.

Online grocery delivery firm Ocado (OCDO) jumped 8% to £24.59 after it upgraded full year earnings expectations having reported strong demand from its Ocado Retail joint venture with Marks & Spencer.

As a result of the strong performance, the firm now expects full year EBITDA for the group to be over £60 million, versus previous guidance of over £40 million.

Meanwhile the company also announced two acquisitions. It agreed a deal to buy robotics company Kindred Systems for $262 million, and robotic arm designer and manufacturer Haddington Dynamics for $25 million.

ELSEWHERE ON THE MARKETS

Outsourcer Serco (SRP) plunged 13.3% to 112.2p after it was stripped of a joint venture contract to provide nuclear warheads with the Ministry of Defence (MoD) moving to effectively renationalise the job.

Serco said it was informed by the MoD on Friday night that AWE plc, the entity controlling the Atomic Weapons Establishment and in which it holds a 24.5% interest, will transfer back under the direct control and management of the MoD from 30 June 2021.

Insurance firm Hiscox (HSX) gained 2.3% to 843p after it said gross written premiums grew 15% in the third quarter of the year, thanks to rate improvement and growth in customer numbers.

Kitchens and joinery products seller Howdens (HWDN) gained 0.7% to 641.4p after it said it would consider renewing dividend payments next year, baring no further disruptions, after performance improved ‘significantly’ following virus-led disruptions to activity in the first half of the year.

Fund manager Liontrust Asset Management (LIO) fell 1.6% to £12.30 as it completed the sale and purchase of Architas’ UK Investment business for up to £75 million.

The acquisition adds £5.69 billion to assets under management and advice, taking Liontrust AuMA to £26.8 billion, the company said.

Park Plaza hotel owner PPHE (PPH) fell 7.7% to 928p after it reported a big fall in revenue and occupancy in its third quarter. Total revenue in the three months to 30 September fell 74.2% to £31.2 million, compared to £121 million in the same period a year ago, as occupancy dropped to 28.6% from 86.7% in the third quarter of 2019.

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Issue Date: 02 Nov 2020