UK markets managed to dig out some positive momentum through Tuesday afternoon as investors were torn between a fresh wave of Government restrictions as Covid cases rise and signs of a tech recovery as US markets opened higher.

Pubs and restaurants face 10pm curfews from Thursday, Prime Minister Boris Johnson insisted today, while millions of British workers are again being advised to work from home if possible. This has sparked new concerns for jobs in the already hard hit leisure, hospitality and travel industries.

But across the pond there were positive signs for leading tech stocks, where the Nasdaq made solid gains, giving investors something to smile about.

At the close, the benchmark FTSE 100 index had managed to claw its way to 0.4% gains taking the index to 5,829.46, ending a five day run of hefty losses.

But the mid-cap FTSE 250 failed to respond in kind, drifting 0.3% lower to end the day at 16,821.66, its lowest level since late May.

The decidedly risk-off mood saw the pound lose ground against major global currencies, while Brent crude futures and gold slipped.


In company news, DIY retailer Kingfisher (KGF) announced strong first half results for the period ended 31 July with organic turnover down just 1% thanks to a 164% increase in online sales, which have more than doubled as a proportion of group revenues.

Adjusted pre-tax profits were up 23% to £415 million and free cash flow was over £1 billion thanks to higher operating profits and a steep drop in working capital. As a result, the firm’s net debt to EBITDA ratio halved to just one, well below the medium-term target level.

The shares ended the day up nearly 10% at 290.9p.

Drinks maker AG Barr (BAG) soared more than 15% to 430p after the company posted a relatively positive first half update with revenues down 7.6% but the firm’s value share of the UK soft drinks market rising.

Adjusted first half earnings were up 19.4% to £16.6 million while the operating margin rose strongly to 15.1% helped by cost control measures. The firm is holding fire on dividends but is confident of meeting its full year earnings targets.


Premier Inn owner Whitbread (WTB) reported that 98% of its hotels had reopened by the end of the first half and that trading was ahead of the market thanks to strong demand in tourist locations.

Its restaurant performance had also been helped by the Eat Out to Help Out scheme with August UK total sales (accommodation and food and beverage) down 38.5% on last year.

However, the firm said that with market demand expected to remain low in the medium terms it was looking to lay off up to 6,000 people or 18% of its total workforce in order to cut costs.

Whitbread shares recovered some of their earlier 5% loses but still traded close on 3% down at £20.49.

Travel operator TUI (TUI) posted a downbeat trading statement for the year to 30 September with summer booking down 83% and average selling prices down 19%.

The firm said it had ‘been impacted by continuous changes in travel advice by various governments across our markets’ over the last month, meaning it has had to cut capacity and the number of destinations it serves.

It also confirmed it would lay off up to 8,000 staff in order to reduce its annual overhead costs by 30%, adding to the number of people losing their jobs. Shares ease off 1% to 269p.


Insurer Beazley (BEZ) was among the biggest Tuesday losers, spinning more than 14% lower to 335.2p after the company doubled its estimate of the cost of Covid claims from $170 million to $340 million net of reinsurance as major events and conferences continue to be cancelled.

The firm said ‘we made a number of assumptions including that events would resume in September this year which would lead to a normalisation in the levels of contingency claims. Given the evolving status of Covid-19 we no longer expect this to be the case.’

Information services provider and events company Euromoney Institutional Investor (ERM) shed 1% to 794p, even as it forecast an adjusted pre-tax profit ahead of market expectations, thanks to higher subscription revenue.

Euromoney, however, also warned of further pressure on its events business due to likely cancellations owing to the pandemic.

Generic drug maker Hikma Pharmaceuticals (HIK) slumped 4.5% to £24.70 thanks to a delay in the regulatory approval of its generic form of GlaxoSmithKline's (GSK) respiratory drug Advair.

Residential development and regeneration specialist Sigma Capital (SGM) rallied 17% to 114.5p on news that it had formed a joint venture with EQT Real Estate (EQT) to deliver new homes for private rental in Greater London.

The venture was being supported by UK government agency Homes England and was targeting establishment of an initial portfolio of around 3,000 homes with a value in excess of £1 billion.

Sports, leisure and mobility equipment retailer Tandem (TND) recovered earlier loses to end Tuesday modestly higher at 385p, even as it posted a rise in first-half profit and doubled its dividend to 3.12p per share, as demand for bicycles jumped during the pandemic.

Revenue growth, however, had been limited to 6% due to weaker free-on-board orders from national retailers.

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Issue Date: 22 Sep 2020