Unusually, UK stocks tumbled together with the pound on Monday after Brexit talks stumbled yet again and a new strain of the virus led to even more draconian rules on personal movement.
New emergency Tier Four restrictions created chaos for people travelling ahead of Christmas while many European countries have suspended inbound travel from the UK.
By midday the FTSE 100 was down 154 points or 2.4% to 6,375 points. Airlines, energy companies and the hospitality sector took the brunt of the selling while mining companies benefited from the weakness in sterling.
The pound was also down 2% against the US dollar to $1.32, while Brent Crude prices were 3.3% lower at $50.6 per barrel. Gold jumped 1% to $1,898 an ounce.
NEWS ROUND UP
Oil major Royal Dutch Shell (RDSB) said it expects to book net charges of between $3.5 billion and $4.5 billion in the fourth quarter, in relation to impairments, asset restructuring and onerous contracts.
Shell said the charges were linked to its upstream business, including a partial impairment of the Appomattox asset in the US Gulf of Mexico, plus its oil products and integrated gas businesses.
Adjusted earnings at its upstream business were expected to show a loss in the current price environment. The company will present a strategic update to investors on 11 February 2021. Shares dropped almost 6% to £12.61.
Sports Direct owner Frasers (FRAS) pulled guidance for its annual performance after it was forced to shutter stores in large parts of England in the wake of the latest government coronavirus restrictions.
Given this is the peak trading period for retailers, and with the likelihood of further rolling lockdowns nationwide over the coming months, Frasers said it could no longer commit to meeting its guidance of achieving a 20% to 30% improvement in underlying earnings before interest, taxes, depreciation and amortization (EBITDA). Shares sank 10% to 429p.
NatWest (NWG) said it had agreed to acquire a £3.0 billion portfolio of prime UK mortgages from challenger lender Metro Bank (MTRO) for £3.1 billion. NatWest said the purchase represented a 2.7% premium to gross book value.
The portfolio consists of owner-occupied residential mortgages with a weighted average current loan to value of around 60%. NatWest shares dropped 4.5% to 150p while Metro Bank shares rallied 13% to 129p.
Shares in online fast fashion retailer Boohoo (BOO:AIM) fell 1.9% to 303.5p as the firm appointed a new auditor but disappointed some investors by not hiring one of the ‘big four’.
Following a tender process led by its audit committee, Boohoo said its board of directors has approved the proposed appointment of PKF Littlejohn as its new auditor with immediate effect.
Property investor Stenprop (STP) said it had agreed to sell its freehold interest in the Victoria Centre in Berlin to Art-Invest Real Estate Funds for €37.5 million.
Stenprop said the disposal price was at its 30 September book value and reflected a 19.3% premium to the 31 March book value.
It added that the deal was in line with its strategy of becoming entirely invested in multi-let industrial properties via the sale of non-core assets.
Net proceeds from the sale after deduction of anticipated transaction costs, repayment of debt and property taxes were expected to be €24.1 million. Shares gave up 1.5% to 132p.
Shares in budget greetings cards-to-gifts purveyor Card Factory (CARD) sank 9.5% to 40p on Monday, despite the retailer announcing Darcy Willson-Rymer as its new chief executive.
The tighter Tier four restrictions announced at the weekend, with all but essential shops closed until further notice, will test the group’s renewed focus on its new online and partnership strategy.
Aviation services group Signature Aviation (SIG) said its board had indicated to Blackstone that it would ‘currently be minded to recommend a firm offer’ for the company.
Blackstone Infrastructure Advisors and Blackstone Core Equity Management Associates had offered $5.17 per Signature share, equating to £3.86 in sterling and a 44% premium to the company's closing price on 16 December. Shares gained 1.2% to 373p.
HEATHCARE NEWS
Pharmaceutical company GlaxoSmithKline (GSK) said ViiV Healthcare, its joint venture company with Pfizer and Shionogi, had won marketing approval for its combination injection to treat HIV-1 in adults who were virologically suppressed.
The long-acting injectable regimen was preferred by majority of clinical trial patients who tried the treatment over their previous daily oral therapy, ViiV Healthcare said. Shares added 0.1% to £13.58.
Pharmaceutical giant AstraZeneca (AZN) said its non-small cell lung cancer drug Tagrisso had been approved under the US Food and Drug Administration's (FDA) real-time oncology review pilot program.
In a separate statement, AstraZeneca said the FDA had requested further clarifying analyses of clinical data, to complete its review of the new drug application for roxadustat to treat patients with anemia of chronic kidney disease. The shares lost 1% to £74.29.
FOR A LIST OF FTSE 100 GAINERS AND LOSERS SEE HERE
