After a slow opening following the announcement of a second national lockdown, UK stocks soared in mid-morning trading on Monday having been buoyed by a weaker pound and slightly improving sentiment.

The exporter-heavy FTSE 100 gained 1.16% to 5,642 shortly after 12pm as the pound grappled with the lockdown impact and various other issues, including a lack of progress on Brexit talks, the threat of the Bank of England setting negative interest rates on Thursday and the prospect of a contested outcome from the US election.

The more domestically-focused FTSE 250, hit by weakness in retail, pub and leisure stocks, also moved into positive territory, inching 0.01% higher to 17,216.69 having opened well into the red.

LOCKDOWN DEVELOPMENTS

Primark owner Associated British Foods (ABF) reversed earlier losses to trade 0.2% higher at £17.02 after it warned of a £375 million loss on Primark sales on temporary store closures following new lockdowns implemented across Europe and the proposed lockdown in England.

Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia were temporarily closed, which represented 19% of its total retail selling space.

Gambling company GVC (GVC) dropped 1.6% to 950.4p after it warned on performance following enforced store closures across UK and European retail amid further coronavirus lockdown measures.

The company estimates the impact on EBITDA of currently required retail closures at £37 million, while the impact on EBITDA if all retail outlets were to be closed for a month would be £43 million.

Budget airline Ryanair (RYA) gained 4.51% to €12.52 despite posting a loss for its key summer period for the first time in decades, and warned the coronavirus crisis could force further cuts and leave capacity next summer as little as half of normal levels.

Online grocery deliver firm Ocado (OCDO) jumped 10.1% to £25.05 after it upgraded full year earnings expectations having reported strong demand from its Ocado Retail joint venture with Marks & Spencer.

As a result of the strong performance, the firm now expects full year EBITDA for the group to be over £60 million, versus previous guidance of over £40 million.

Meanwhile the company also announced two acquisitions. It agreed a deal to buy advanced piece-picking robotics company Kindred Systems for $262 million, and robotic-arm designer and manufacturer Haddington Dynamics for $25 million.

ELSEWHERE ON THE MARKETS

Outsourcer Serco (SRP) plunged 13.1% to 112.5p after a joint venture it was part of was stripped of a contract to provide nuclear warheads, after the Ministry of Defence (MoD) moved to effectively renationalise the job.

Serco said was informed by the MoD on Friday night that AWE plc, the entity controlling the Atomic Weapons Establishment and in which it holds a 24.5% interest, will transfer back under the direct control and management of the MoD as from 30 June 2021.

Insurance firm Hiscox (HSX) gained 2.5% to 845p after it said gross written premiums grew 15% in the third quarter of the year, thanks to rate improvement and growth in customer numbers.

Kitchens and joinery products seller Howdens (HWDN) gained 1.7% to 647.4p after it said it would consider renewing dividend payments next year, baring no further disruptions, after performance improved 'significantly,' following virus-led disruptions to activity in the first half of the year.

Fund manager Liontrust Asset Management (LIO) fell 3.2% to £12.10 as it completed the sale and purchase of Architas' UK Investment business for up to £75 million.

The acquisition, completed on 30 October 2020, would add £5,691 million to assets under management and advice, taking Liontrust AuMA to £26.8 billion, the company said.

Park Plaza hotel owner PPHE (PPH) dipped 1.3% to 991.7p as it reported a big fall in revenue and occupancy in its third quarter. Total revenue in the three months to 30 September fell 74.2% to £31.2 million, compared to £121 million in the same period a year ago, as occupancy dropped to 28.6% from 86.7% in the third quarter of 2019.

Engineering company Weir (WEIR) gained 1.4% to £14.54 after it appointed two former mining CEOs to its board of directors as it looks to transition to becoming a mining technology business. Srinivasan Venkatakrishnan and Ben Magara will join Weir's board as non-executive directors with effect from 19 January 2021.

Independent oil and gas company i3 Energy (I3E) gained 18.4% to 4.8p after it said it expected to declare and pay its first dividend in the first quarter of next year. The company also said it had completed the acquisition of Toscana, which was expected to be listed on the Toronto Stock Exchange.

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Issue Date: 02 Nov 2020