UK stocks gave up most of yesterday’s gains heading into the weekend as growing geo-political tensions between the US and China over Hong Kong sent Asian markets down overnight.

Investors are concerned that President Trump could change the US's trade stance towards Hong Kong at a press conference later today, spurring retaliation from China including the black-listing of US companies operating there.

Oil prices gave up some of their recent gains, with Brent crude trading down 1.2% at $33/barrel, while the gold price held steady at $1,720/ounce.

MAJOR MOVERS

At 9am the FTSE 100 was lower by 0.9% at 6,160 points, with overseas earners such as luxury retailer Burberry (BRBY), cruise operator Carnival (CCL), hospitality group Compass (CPG) and drinks firm Diageo (DGE) weighing on the index as the pound strengthened against the dollar and the euro.

The biggest laggard was aircraft engine maker Rolls Royce (RR.) which lost another 7.5% to 295p, reversing more of its recent gains, after it was revealed that hedge fund AKO Capital had offloaded its 5.2% stake and ratings agency standard & Poor’s had cut the firm’s credit rating to BB or ‘junk’ status.

Pharmaceutical giant AstraZeneca (AZN) revealed positive news on its Tagrisso lung-cancer drug, sending its shares up 1.6% to £88.40.

Results from phase III trials showed that Tagrisso demonstrated ‘a significantly and clinically meaningful improvement in disease-free survival’ in patients with early-stage non-small cell lung cancer after surgery, with an 80% reduction in the risk of disease recurrence or death.

Betting firm Flutter Entertainment (FLTR), which owns the Paddy Power and Betfair brands, traded sideways at £105.65 after it announced it had placed 8m new shares at £101 raising over £800m. The placing represents roughly 5.5% of the company’s existing share capital.

MID-CAP GAINERS AND LOSERS

Building materials supplier SIG (SHI) rose 3.8% to 29p despite posting lacklustre full year results and announcing a £150m equity raise backed by US private equity investor Clayton, Dubilier, Rice.

New chief executive Steve Francis ascribed the firm’s loss of market share last year to ‘poor execution’ and poor communication with its customers, while outlining his plan to get the firm back on track this year.

The company also announced the appointment of a new chief finance officer, Ian Ashton, who was finance director at Low & Bonar until it was acquired by Germany’s Freudenberg Holding earlier this year.

Discount retailer B&M European Value (BME) added 3.4% to 382p after it published an upbeat trading update for the fourth quarter and the first eight weeks of its new financial year.

Revenues in the quarter to the end of March were up 6.6% on a like for like basis, but jumped almost 23% in the eight weeks to 23 May helped by ‘exceptionally strong’ sale of DIY and gardening products.

Chief executive Simon Arora put the sales increase down to a ‘significant pull-forward of demand caused by warm dry weather’ and the closure of most garden centres, and cautioned that spending was likely to ‘normalise’ in the coming months.

Shares in textile services and workwear rental firm Johnson Service Group (JSG) dropped 9% to 130p after it announced an £85m equity raise in order to see it through what it predicts will be a ‘prolonged lockdown’ in the hotel, restaurant and catering (HORECA) industry.

The firm is placing 73.9m new shares, representing just under 20% of its existing share capital, at a price of 115p compared with last night’s closing price of 143p.

Specialist property firm Urban Logistics REIT (SHED:AIM) reported a strong increase in net rental income and the valuation of its portfolio in the year to 31 March.

Net rental income rose 20.7% to £12.2m while the valuation of its holding rose 11% to 207p per share. The firm raised £136m of capital in March to acquire more logistics properties.

 

FOR A LIST OF FTSE 100 RISERS AND FALLERS SEE HERE

 

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 29 May 2020