UK stocks drifted in early trading as investors awaited the next piece of US economic data, the December non-farm payrolls report due at lunchtime. A stronger than expected number could be negative for markets as it adds to worries the US Federal Reserve will raise rates earlier than expected.

There was positive news in the technology sector with Samsung Electronics, a major Asian chipmaker, and STMicroelectronics, one of Europe’s biggest chipmakers, both posting better than expected fourth quarter revenues due to strong demand.

Closer to home, the Halifax building society reported average UK house prices rose by 9.8% in December, the fastest pace since July 2007, to a record high of £276,000. The rise takes the annual increase to £24,500, the biggest yearly gain since March 2003.

The FTSE 100 was largely unchanged, however, easing 16 points or 0.2% to 7,424 points at 9am, with financials and miners helping to hold the index up while consumer facing stocks dominated the losers.

COMPANY NEWS

Shares in Royal Dutch Shell (RDSB) eased 0.3% to £17.16 despite the company saying it would continue its $7 billion buyback programme ‘at pace’. Shell still has $5.5bn of proceeds from the sale of assets in the Permian Basin, and the buyback is in addition to the 20% to 30% of cash flow distributed to shareholders under the capital allocation programme.

The firm posted a mixed trading update for the final quarter, with revenues from oil marketing well below the previous quarter and gas production below estimates due to unplanned maintenance, although trading profits were higher thanks to the jump in LNG spot prices.

Shares in drinks group C&C (CCR) dipped 2.5% to 231p after it hinted that full year operating profit might not meet its target of €50 million to €55 million due to the re-imposition of restrictions in the UK and Ireland in December, which had ‘significantly impacted’ trading.

The firm said it had a strong balance sheet and more than enough liquidity to support its operations but due to uncertainty over the extent and duration of government restrictions it would wait until March to update its guidance.

Shares in industrial conglomerate Essentra (ESNT) were flat at 340p after the firm posted a 12.7% increase in fourth quarter like for like revenues and confirmed its full year earnings target.

However, there was no new news on the strategic review and the divestment of the Filters and Packaging divisions other than that it was ‘progressing as planned’.

Shares in free to air broadcaster ITV (ITV) fell 2.5% to xxxp after analysts at Morgan Stanley downgraded their recommendation from Buy to Hold on concerns advertising revenues might disappoint due to the impact of the omicron variant on global growth.

MID- AND SMALL-CAP NEWS

Luxury carmaker Aston Martin Lagonda (AML) reported an 82% increase in sales to dealers, due mainly to demand for its DBX sports utility vehicle, but cautioned that core earnings would be about £15 million lower than expected due to a delay in orders for its latest Valkyrie sports car. Shares moved 2.5% higher to £14.04 on the update.

Car retailer Lookers (LOOK) said it expected to post record underlying pre-tax profits for the year to December ahead of the current consensus of £82 million, sending its shares 4% higher to 72.6p.

The firm also said it would reinstate dividends alongside the full year results, which will be released in mid-April.

Aviation services company Air Partner (AIR) announced that due to continued strong customer demand through December, in particular freight bookings, it expected pre-tax profits for the year to the end of January to come in ‘materially ahead’ of market expectations. Shares climbed 4.5% to 90p.

In a similar vein, shipping services firm Clarkson (CKN) reported stronger than expected trading in December meaning pre-tax profits for the full year would be no less than £69 million, lifting its shares 4.5% to £39.95. The current consensus puts pre-tax earnings at £65 million.

Scientific instrument maker Judges Scientific (JDG:AIM) also raised its guidance for the full year thanks to double-driven revenue growth driven by a recovery in orders in the second half, sending its share up 4% to £85.09.

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Issue Date: 07 Jan 2022