UK stocks hit six-month lows on Wednesday as growing fears of further lockdowns and investors started to factor in the likely economic impact. The FTSE 100 dropped 2.3% to 5,597 points with cyclical shares seeing the brunt of the fall.

According to Bloomberg reports, Germany will announce today that it is moving to a one month closure of bars and restaurants while urging people to keep contact to a minimum. European shares were down 2.5%.

CORPORATE NEWS

Although it looks like shares in engine maker Rolls-Royce (RR.) dropped 65% to 77.4p, this reflects the first day’s admission of 6.4 million new ordinary shares in relation to the 10-for-3 rights issue announced on 1 October.  Adjusted for the issue the shares were trading around 3% higher.

Clothing retailer Next (NXT) upgraded its annual profit guidance after it grew its sales by more than expected in the third quarter.

Pre-tax profit for the full year, based on a central sales scenario, was now expected at £365 million, up from the £300 million scenario given in September

Full-price sales in the three months through September had risen 2.8%, while total sales, including markdowns, had risen 1.4%. Shares gained 0.4% to £61.2.

Pharmaceutical company AstraZeneca (AZN) said the Declare-Timi 58 phase-three trial had showed its heart diabetes drug Forxiga achieved a statistically significant reduction in the composite endpoint of hospitalisation for heart failure or cardiovascular death, versus placebo, in adults with type-2 diabetes and established cardiovascular disease or multiple cardiovascular risk factors.

Separately the company said its gastric cancer drug candidate Enhertu had received supplemental biologics license application and has also been granted priority review in the US. Shares dipped 0.1% to £80.5.

Specialist engineering company IMI (IMI) said third quarter trading was to ‘somewhat better’ than previous expectations amid a one-off surge in ventilator sales which surged to £40 million.

The full-year benefit is expected to be £85 million compared with £70 million previously. The company said it had made good progress on its strategic restructuring initiatives and remained on-track to deliver the targeted 2020 structural savings of £30m.

Looking ahead, the company said it now expected full year 2020 adjusted earnings per share in the range of 74p to 78p. Shares were flat at 167p.

Miner Kaz Minerals (KAZ) has agreed to be acquired by Nova Resources for a cash consideration of 640p, 12% higher than yesterday’s close of 570.8p. The transaction values the company at approximately £3 billion. Shares traded 11% higher to 633p in early trading.

ELSEWHERE ON THE MARKET

Advanced wound care, ostomy care, and continence company Convatec (CTEC) upped its full-year revenue guidance to the top end of the 2-3.5% growth range and said it expected the adjusted earnings before interest margin to be between 18.5-19%.

This is due to the proactive deferral of some recurring transformation investments into 2021 and certain operating expenses continuing to be lower than expected, coupled with some operational gearing. Shares jumped 5% higher to 194.7p.

Bricks and concrete products maker Ibstock(IBST) said volumes had recovered to around 90% of prior-year levels in September and remained at these levels during the month of October.

Assuming no further material disruption in the balance of the year, it expected adjusted earnings before earnings, interest, taxes, depreciation and amortization (EBITDA) for the 2020 financial year to be approximately £50 million. Shares traded 4% lower at 171.5p.

Infrastructure company John Laing (JLG) reported a rise in its third-quarter net asset value, boosted by performance in its public private partnership portfolio.

For the quarter ended 30 September 2020, net asset value grew 2% to £1.55 billion from the June quarter, and to 314p on a per share basis. Shares fell 2.3% to 276.5p.

Food and beverage ingredient supplier Tate & Lyle (TATE) said it had agreed to acquire 85% shareholding of Thai tapioca modified food starch manufacturer Chaodee Modified Starch, for an undisclosed sum.

The investment extends Tate & Lyle's presence in speciality tapioca-based texturants and establishes a dedicated production facility in the main tapioca region of eastern Thailand, said the company. Shares dipped 1.4% to 621.3p.

Cruise operator Carnival (CCL) said its Princess Cruises unit had extended its pause of operations on sailings from Australia and New Zealand through May, citing uncertainty over international Covid-19 related travel restrictions.

It planned to offer customers a refundable future cruise credit equivalent to 100% of the cruise fare paid plus an additional non-refundable bonus FCC equal to 25% of the cruise fare paid. Shares sank 5.5% to 859p.

A list of the biggest movers can be seen HERE

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Issue Date: 28 Oct 2020