As the supermarket Christmas trading reporting season kicked off investors seem pretty relieved by Tuesday’s Morrisons’ (MRW) update. Buyers sent the stock soaring 3% and to the head of the FTSE 100 leader board at 198.35p on Tuesday, while there was a none too surprising profit warning from luxury car maker Aston Martin Lagonda (AML) to digest.

The supermarket chain is the first of the listed UK majors to report on holiday trading, but business was not brisk. Group like-for-like sales, stripping out fuel, fell 1.7% in the 22 weeks to 5 Jan, with retail the key culprit for the decline.

‘Throughout the period, trading conditions remained challenging and the customer uncertainty of the last year was sustained’, said the company.

Yet investors are evidently relieved that the figures were not far worse and attention will quickly turn to how Sainsbury (SBRY) and Tesco (TSCO) managed over Christmas. The pair both report later this week.

Sainsbury shares rallied more than 2% to 231.6p in response to the Morrisons statement, while Marks & Spencer (MKS) jumped nearly 5%. Tesco traded largely sideways, nudging just 0.5p, or 0.2%, higher to 254.5p.

The FTSE 100 staged a very modest recovery after yesterday’s sell-off, nudging six points or so higher in early trade to 7,581.19, while the mid cap FTSE 250 made stronger gains, up 0.45% to 21,858.26.

Overnight, the spot price of gold hit $1,582.59 an ounce, its highest since April 2013, as investors continue to fret over escalating tensions in the Middle East, although oil prices eased back after two days of firm gains.

CAR CRASH FOR ASTON MARTIN

Aston Martin has warned that full year earnings before interest, tax, depreciation and amortisation will be 45% lower than expected. The struggling luxury car maker expects full year profits to be £130m and £140m following a tough end to the year, about half the £247m last year.

Aston Martin said that ‘challenging trading conditions’ it encountered in November had ‘continued through the peak delivery period of December resulting in lower sales, higher selling costs and lower margins.’

This saw Aston’s share price plunge more than 12.5% in early trading to 455.4p. The company floated its shares on the stock market at £19 just 15 months ago.

But the real fear for investors is Aston Martin’s debt. While the company has end of year cash of £107m on the books it leaves its balance sheet looking very stretched, with net debt ranging from £875m to £885m. That exposes the group to leverage of between 6.2-times and 6.8-times, experts calculate, which will seriously worry its bond holders and lenders.

Oil firm Premier Oil (PMO) jumped more than 13% to 114.75p after striking a deal to buy some of BP’s oil fields in the North Sea for $625m.

The agreement includes five fields in the Andrew Area which is roughly equidistant between Scotland and Denmark.

Premier also updated on trading, saying that its ‘strong operational performance in 2019’ has generated significant free cash flow, enabling the company to ‘materially reduce our debt levels and to invest selectively in our portfolio for future growth.’

Online gambling company 888’s (888) shares fell by 0.6% after it said it remained 'confident' that adjusted earnings with meet its expectations amid continued progress in the second half of the year.

MIXED FOR SAFESTORE

Storage company Safestore’s (SAFE) stock also fell slightly, by 0.5%, despite reporting a 5.5% increase in revenue for its financial year ended 31 October 2019, bringing in £151.8m.

Earnings per share grew 6.3% year-on-year to 28.5p, while free cash flow hit £61.2m - a 10.5% increase on the 2018 financial year. However, profit before tax declined by 20.5% to £147.3m.

Pharmaceuticals group Silence Therapeutics (SLN:AIM) saw a similar increase in its share price, up by 14.2%, as it announced a technology evaluation agreement with Japanese medical giant Takeda to explore the use of Silence's proprietary platform.

Silence also plans to open a US subsidiary in 2020 to increase its exposure to the North American healthcare market.

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Issue Date: 07 Jan 2020