UK stocks hit their lowest level since late April as investors reacted to another surge in coronavirus cases in Europe and there was increasing concern over the outcome of next week's US presidential election.

At midday the FTSE 100 index was down 94 points or 1.7% to 5,635 points with mining, metal and house-building shares at the bottom of the pile and just half a dozen stocks making gains.

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%.

Brent crude oil prices sank 2.5% to $39 per barrel on renewed fears of an economic slowdown and rising exports from Libya, while gold, normally a safe haven when markets are in turmoil, also dropped 0.5% to $1,893 per ounce.

CORPORATE NEWS

Shares in engine maker Rolls-Royce (RR.) dropped 56% to 96.75p, although 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 slightly 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 3% to £62.82.

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. Shares were flat at £80.40.

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.

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 dipped 0.7% to £10.58.

Miner Kaz Minerals (KAZ) agreed to be acquired by Nova Resources for a cash consideration of 640p, 12% above yesterday’s close of 570.8p. The transaction values the company at approximately £3 billion. Shares traded 9.5% higher to 625p at lunchtime.

ELSEWHERE ON THE MARKET

Advanced wound care, ostomy 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 195p.

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 slumped 11% 159p.

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 slipped 0.9% to 280p.

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 0.4% to 628p.

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 6% to 854p.

A list of the biggest movers can be seen HERE

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Issue Date: 28 Oct 2020