There was little cheer for investors heading into the fourth quarter as the squeeze on global energy prices continued to send markets lower. In the US, the S&P 500 index finished down 1.2% at 4,023 points, defying recent bullish talk by analysts, while in Asia the Nikkei index slumped 2.3%.
In energy markets, Brent crude eased 1% to $77.80 per barrel but European front-month natural gas prices hit an all-time record of €100 per MWh compared with just €15 a year ago.
Gas prices in Asia are even higher than European prices, prompting the Chinese government to claim it will secure energy ‘at any cost’, encouraging coal-fired plants to step up production even as the COP26 environment summit looms.
At 9am the FTSE 100 was down 48 points or 0.7% to 7,038 points, with defensive sectors such as utilities and consumer staples managing to eke out gains while industrial and consumer discretionary stocks bore the brunt of the selling.
Online domestic electricals retailer AO World (AO.) delivered a disappointing first half trading update, with sales up just 5% in the six months to September due to slowing demand, more competition online, supply chain disruption and a shortage of delivery drivers in the UK.
The firm said it expected similar sales growth in the second half and full year earnings before interest, taxes, depreciation and amortisation (EBITDA) of between £35 million and £50 million compared with a consensus forecast of £52.5 million. Shares were dumped 17% to 180p.
Shares in pub group JD Wetherspoon (JDW) were steady at £10.40 after the firm posted a tough set of full year results for the period to July, with like for like sales down 38% and pre-tax losses soaring from £44.7 million to £167 million.
‘In the last year, the country moved, in succession, from lockdown, to 'Eat Out to Help Out', to curfews, to firebreaks, to pints with a substantial meal only, to different tier systems and to further lockdowns’, observed chairman Tim Martin.
The six-month long battle for control of supermarket group Morrisons (MRW) looks like being resolved this weekend in an auction between US private equity firm CD & R and a consortium led by Softbank-owned investment group Fortress.
CD & R, which has been advised by former Tesco (TSCO) boss Terry Leahy, has pitched its offer at 285p per share but under the auction rules both sides are free to raise their price in up to five rounds of bidding. Morrison shares traded sideways at 294p, suggesting investors expect a higher offer.
Convenience food maker Greencore (GNC) reported an improvement in revenues, profits and cash flow in the fourth quarter thanks to a recovery in its food to go business as more people return to the office.
The sandwich and quiche producer posted pro-forma sales up 27% in the quarter to September and said it expected operating profits to towards the top end if its guidance range of £36 million to £40 million. Despite the positive update, shares drifted 3% lower to 137p.
Shares in cyber security star Darktrace (DARK) slumped 11% to 732p after major shareholders including private equity firm KKR sold 25 million shares at 750p against a closing price last night of 820p.
The early exit was facilitated by the investment banks which ran the float agreed to waive the usual lock-up agreements.
Gulf Marine Services (GMS), which supplies vessels to the offshore energy industry, reported a small increase in first half revenues to $51.4 million but a significant increase in EBITDA to $26.5 million thanks to lower operating expenses and interest costs on its debt.
The firm said it has a secured order backlog of $215 million as of the end of June and a ‘strong’ pipeline of long-term contracts under tender. Shares jumped 9% to 4p.
Alternative asset manager Gresham House (GHE) announced it had acquired the venture capital trust business of Mobeus Equity Partners, adding £369 million of assets and making the firm a ‘leading player’ in the sector with £850 million of assets under management. Shares added 0.6% to 912p.
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