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FTSE 100 opens modestly higher; AB Foods pummelled after Goldman Sachs downgrade

Strong gains from the likes of Mondi and SSE have so far kept the FTSE 100 in the black, although M&S and AB Foods are trying their hardest...
primark
AB Foods nursed some losses on Tuesday following its full-year results, and it's taking another beating today

10.05am....M&S finance boss to step down

Marks and Spencer Group Plc (LON:MKS) said its chief financial officer Helen Weir has stepped down as the retailer reported a 5.3% decline  in first half profits.

The retailer said in a statement that Weir is leaving to pursue a “plural career” and will stay in the role until a successor has been found.

In a separate release, the company posted pre-tax profit before tax and adjusted items of £219.1mln for the six months to September 30, compared to £231.3mln in the year-ago period.

UK like-for-like sales fell by 0.3%, including a 0.7% decline in the struggling clothing and home division, as well as a 0.1% drop in food sales.

Food had been the side of the business that was chugging along nicely, but Marks’ said increased competition and rising inflation was starting to bite.

 

As a result, it has scaled back plans to open 200 new food-only stores by the end of 2019 and will now only add 80 Simply Food shops.

 

9.45am...Wetherspoon boss slams Sainsbury’s boss for Brexit “misinformation”

As is now to be expected, alongside JD Wetherspoon PLC’s (LON:JDW) latest trading – which showed the pub chain has enjoyed a solid start to its new year – the firm’s Brexit-backing boss Tim Martin once again gave his opinion on Britain leaving the EU.

He laid into the bosses of J Sainsbury plc (LON:SBRY) and Costa Coffee owner Whitbread plc (LON:WTB), accusing them of spreading “misinformation” around the topic.

"A key issue for investors and the public is the impact of Brexit on the economy,” explained Martin.

“In this connection, statements have been made by some senior PLC directors and trade organisations which are factually incorrect and highly misleading. Unsurprisingly, the misinformation has been adopted by many among the media, investors and the public, as if it were true.”

He added: "The misinformation from directors and trade organisations seems to be designed to support the view that staying in the EU for an additional two years is necessary to avoid a  'cliff edge'.

“There is no cliff edge. Wetherspoon, for example, is ready now to leave the EU, since almost no preparation is required - as is almost certainly the case for Sainsbury's and Whitbread, and the vast majority of companies.”

 

9am...Steady start for Footsie

The FTSE 100 got off to a steady if unspectacular start on Wednesday morning, opening 6 points or 0.1% higher at 7,519.3.

It would likely have opened further in the black had it not been for a couple of notable fallers – namely Associated British Foods plc (LON:ABF) and Marks and Spencer Group Plc (LON:MKS).

Primark owner AB Foods’ shares took another hit as Wall Street giant Goldman Sachs downgraded the stock to ‘hold’ from ‘buy’ and also lowered its price target.

The share price is down 2.6% to £31.35, although that’s still below the £34 Goldman reckons the stock is worth.

Weak performance from M&S' food division

M&S shares lost 1.7% to trade at 322p following another set of underwhelming results from the high street stalwart.

Struggles with its clothing business have been known for a while but decent performances from the food side of the business had kept investors interested.

That changed though in the opening half of its year, with M&S bemoaning increased competition and rising inflation as it scrapped plans to open 120 food-only stores by the end of 2019.

On top of the weak food showing, underlying pre-tax profits in the half fell 5% to £219.1mln (H1 16/17: £231.3mln).

SSE confirms Npower merger

Helping the Footsie higher was packaging group Mondi Plc (LON:MNDI), which was boosted by a bullish note from analysts at Morgan Stanley.

They shifted their rating to ‘overweight’ from ‘equal weight’ and bumped up their price target to £22 (from £20). Shares headed 1.6% higher to £18.32.

Scottish energy provider SSE plc (LON:SSE) was up for the second day in a row as well.

It said yesterday that talks with Npower owner Innogy about merging the companies’ UK businesses were “well advanced”, and it confirmed the merger this morning.

Even a drop in first half profits couldn’t deter investors, who seem to think the deal will prove to be a good one given the rising competition in the UK energy market. Shares powered 1.5% higher to £14.32.

 

6.50am...FTSE set for slow start

UK equities were expected to continue yesterday's fall this morning, albeit with the brakes on somewhat after a solid set of trade figures from China.

After declining 49 points to 7,513 on Tuesday, spread betting quotes pointed to the FTSE 100 opening at around 7,508.

Exports from China grew by 6.9% in US dollar terms in the year to October, down from an 8.1% increase the previous month and less than the 7.2% expected by economists.

Imports were up 17.2%, down from 18.6% the previous month and more than the 16% consensus forecast.

“China is making a concerted effort to move towards a more service focused economy; that being said, their demand for minerals is still a major driver of commodity prices and mining companies,” noted David Madden at CMC Markets.

US markets were mixed overnight, with the Dow Jones eking out a rise and the S&P 500 easing a tad.

The Dow closed at 23,557, down 9 points, while the S&P 500 was half a point lighter at 2,590.6.

Things were similarly mixed in Asia, heading towards the end of trading.

In Japan, the Nikkei 225 was down 24 points at 22,914, while in Hong Kong the Hang Seng index was down 37 points at 28,957 but elsewhere the Shanghai Composite hardened 6 points to 3,420.

Closer to home, the main event this morning is likely to be interim results from Marks & Spencer, though Nigel Farage will no doubt be logging on to read the Wetherspoon trading update and the latest diatribe against Europe from the pubs group's founder, Tim Martin.

Archie Norman, the former Asda chief executive who joined M&S as chairman in September, has a difficult task ahead as a tough UK retail market adds further pressure on the clothing and home arm.

Under chief executive, Steve Rowe, the company has already taken steps to improve clothing sales by revamping product ranges and prices.

Last year the group said it would close 30 stores as part of its restructuring to reduce the space dedicated to clothing.

M&S is expected to announce in its interims that it will ramp-up the store-closure plan amid weak trading conditions for UK retailers.

“We see potential to accelerate and extend the store closure programme; increase investment in lower entry price points to the benefit of volume sales growth while broadening range appeal to younger customers,” said HSBC.

“This will have a positive spin-off effect for online sales at the wider group level.”

Wetherspoon's Tim Martin is likely to bang the Brexit drum again when the pub operator reports its first quarter trading update.

He believes the company will save an average of 3.5p per meal and 0.5 p per drink after Brexit as it would mean getting rid of EU food import taxes.

As for the business itself, ‘Spoons said in its full-year results back in September that it had got off to a good start in the current fiscal year.

The FTSE 250 group has been saying for a while now that it needs sales growth of around 3-4% this year if it wants profits to break through the £100mln barrier again this year.

Other big names reporting include house-builder Persimmon, supermarkets group J. Sainsbury and cars insurer esure.

Proactive news headlines

NQ Minerals PLC (NEX:NQMI, OTCQB:NQMLF), an Australia-based exploration and mining company, has raised roughly £150,000 through a share issue for working capital purposes. 

Microbiome pioneer OptiBiotix Health plc (LON:OPTI) will launch its revised formulation of hunger suppressant product SlimBiome using a powder technology developed by its new partner Knighton’s.

Bacanora Minerals Ltd  (LON:BCN CVE:BCN) has been granted a mining licence for its Zinnwald joint venture in Germany, putting it on track to have two lithium mines in operation. 

Gold miner Stratex International plc (LON:STI) has invited former chief executive Bob Foster to take up his old job following the departure of Marcus Engelbrecht. 

The ongoing phase I/II trial of ReNeuron Group Plc’s (LON:RENE) human retinal progenitor cell (hRPC) therapy has been given the green light by regulators to move into the phase II part of the study. 

Bushveld Minerals Limited (LON:BMN) has published a proposed timetable relating to its demerger of AfriTin Mining. The demerger record date is today, while the redemption and payment dates are tomorrow. 

Belvoir Lettings PLC (LON:BLV), the UK's largest property franchise, said its Northwood franchise network has completed five portfolio acquisitions in the past two months, bringing the total number acquired this year to 10. The 10 new portfolios should generate around £140,000 a year in management service fees. 

Blockchain focussed investor Coinsilium Group Limited (NEX:COIN) has inked a deal with a German mobile payments specialist for collaboration on new technologies targeting the business-to-consumer (B2C) market. 

Lionsgold Limited (LON:LION) has appointed former Rio Tinto executive Alan Davies as global strategy consultant. 

Skinny Tan owner InnovaDerma PLC (LON:IDP) will tell investors it is on track to hit full-year expectations at Wednesday’s annual general meeting, buoyed by a “positive market” for its range of products. 

Victoria Oil & Gas plc (LON:VOG) has revealed better-than-expected initial results from the drilling of the Logbaba-8 well in Cameroon. The La-8 well was drilled down to a target depth of 2,865 metres and it encountered some 84.5 metres of net gas intervals, across the upper and lower Logbaba formations – which exceeded expectations and is significantly more than the 58 metres seen in the successful recent La-7 well. 

Cabot Energy Plc (LON:CAB) has released its annual reserves statement which shows a substantial increase in the Canada-focused group’s inventory as of 30 September 2017. Total gross proven and probable (2P) reserves amounted to 2.9mln barrels oil equivalent, representing a 53% rise from 1.9mln barrels at the same point in 2016. 

 

Dmitri Tsvetkov has been appointed as the new chief financial officer of India-focused power plant developer OPG Power Ventures Plc. (LON:OPG). He will replace long-term finance director V. Narayan Swami who is retiring from the board. 

Significant announcements expected

Trading updates: JD Wetherspoon PLC (LON:JDW), Novae Group PLC (NVA), OneSavings Bank PLC (LON:OSB), Persimmon PLC (LON:PSN), Tullow Oil plc (LON:TLW), esure Group PLC (LON:ESUR)

Interims: J Sainsbury plc (LON:SBRY), Marks & Spencer PLC (LON:MKS), JZ Capital Partners PLC (LON:JZCP), Sophos Group PLC (LON:SOPH) Wizz Air PLC (LON:WIZZ), Workspace Group plc (LON:WKP)

Finals: Begbies Traynor Group PLC (LON:BEG), Tracsis PLC (LON:TRCS)

Economic data: RICS UK housing survey

Around the markets

  • Pound: US$1.3157, down 11 cents
  • 10-year gilt: 1.234%
  • Gold: US$1,277.50 an ounce, up US$1.70
  • Brent crude: US$63.32 a barrel , down 36 cents

Business headlines

The Daily Telegraph

Sky Bet urges Chancellor not to hit gambling sector with Budget tax hike: The boss of Sky Bet has urged Chancellor Philip Hammond not to raise gambling-related taxes in the forthcoming Budget claiming such a move could stifle his company’s domestic investment plans.

Terra Firma faces battle for Four Seasons control as rival rescue plan tabled: A US investor is seeking to wrestle control of Four Seasons from its private equity owner Terra Firma in a radical rescue plan to prevent the collapse of the debt-laden care homes empire.

Three year legal war over local birds won by £2 billion offshore wind farm: A £2 billion offshore wind project is poised to move ahead after developers won the right to build off the coast of Scotland after years of legal wrangling over the impact on local birds.

Tata invests £30 million in Port Talbot steel plant in show of ‘commitment’ to UK steel industry: Tata is investing £30 million in its Port Talbot steelworks in a move the company says shows its “commitment” to the industry in the UK

Twitter is letting everyone post 280 character tweets: Twitter is giving all of its users the ability to post 280-character tweets, double the length of the 140-character limit that has defined the social network since its inception.

Duchess of Cambridge favourite Hobbs snapped up by Foschini: Hobbs, the fashion retailer favoured by the Duchess of Cambridge, is joining a growing list of British retailers falling into South African hands.

The Guardian

Primark’s sales jump despite squeeze on high street spending: Value fashion chain Primark continues to win new customers from rivals and has unveiled sales growth of more than 6%.

MPs launch inquiry into household finances as £200 billion debt pile looms: MPs have launched a formal inquiry into household finances, as personal debt hits levels unseen since the financial crisis.

Wall Street banks share Brexit fears and warn UK jobs could move overseas – report: Some of Wall Street’s biggest banks have reportedly warned US commerce secretary Wilbur Ross that Britain’s troubled exit from the European Union may force them to quit the UK and start moving thousands of jobs overseas in the near future.

The Times

Energy firms set to merge supply units: Britain’s second and sixth largest household energy suppliers are in talks to merge their energy supply businesses into an independent company, in a move that would turn the Big Six that have dominated the market for 15 years into five.

Advisers told their firms Global Restructuring Group’s secrets: Professionals provided for free by City firms to Royal Bank of Scotland’s restructuring unit abused their position by passing confidential information back to their parent companies, The Times can disclose.

Snap, crackle and drop after disappointing results: Snap unveiled its third dismal quarterly report in succession last night as concern grew that Facebook has successfully cloned the best features of its Snapchat app.

Former Rolls-Royce employees admit bribing foreign officials: Three former Rolls-Royce employees have pleaded guilty to charges of bribing foreign government officials to secure a gas pipeline contract in Asia.

Remove gag on Rolet, furious investor tells LSE Group: One of the largest shareholders in the London Stock Exchange has demanded that the company lifts what it called a “confidentiality agreement” placed on Xavier Rolet, its departing chief executive.

Motor insurance drives increase in premiums at Direct Line: Direct Line pointed to increasing prices as Britain’s largest motor insurer said yesterday that gross written premiums had risen by nearly 3% in the third quarter.

The Independent

New Look crashes to half year loss of £10.4 million: Struggling fashion chain New Look has swung to a half year loss as it became the latest retailer to fall victim to tough conditions on the high street.

Fox held talks to sell most of company to Disney: Fox’s shares jumped 9.9% to close at US$27.45 (£20.89) on Nasdaq, and Disney shares climbed 2.0% to US$100.64 on the New York Stock Exchange.

UK households set to spend £3 billion: UK households are expected to spend a total of £3 billion during the Black Friday sales, which traditionally herald the start of Christmas shopping period, according to new research.

Daily Mail

£231 million wiped off security firm G4S as it warns of sluggish demand in India and the Middle East: Nervous traders wiped £231.2 million off the value of G4S yesterday after the security company warned of sluggish demand in India and the Middle East.

Apple supplier Dialog Semiconductor rockets as iPhones continue to fly off the shelves: Sales have rocketed at Apple supplier Dialog Semiconductor as consumers showed no signs of falling out of love with the iPhone.

Rate rise will not dent the housing market, claims mortgage lender Halifax: The first interest rate rise for more than a decade will not dent the housing market, claims mortgage lender Halifax.

Daily Express

ECB chief Draghi praises reforms - while Italy crumbles under debt crisis: European Central Bank president Mario Draghi has praised reforms of European banks, seemingly ignoring warnings Italian financial firms may never recoup their bad debts.

Cryptocurrency to burst through £6,000 value, says Goldman Sachs: Cryptocurrency Bitcoin is about to be hit the £6,000 mark despite failing £450 over the weekend, according to an analyst at US bank Goldman Sachs.

The Scotsman

SSE in talks with Npower owner on big energy tie-up: Perth-based energy supplier SSE and the owner of Npower are in talks about combining their operations to create a new company in the UK, it emerged today.

Largest shareholder in Johnston Press pushes for Alex Salmond to join board: The biggest shareholder in Johnston Press, publishers of The Scotsman, has formally called for former Scottish National Party leader Alex Salmond to be appointed to the board and for two Directors to be removed.

City AM

Nearly a fifth of HS2 employees left over the past year: Over 200 HS2 employees have left the state-funded rail group over the past year, as it looks to improve stability and tackle the level of churn.

Uber’s gig economy fight could head to UK Supreme Court as employment tribunal appeal ruling coming Friday: Uber’s gig economy fight could be about to head to Britain’s highest court with a decision due in a landmark case over workers rights coming on Friday.

Aviva backs the UK property market as it readies to float a new £200 million commercial real estate investment fund: Aviva has become the latest firm to back London’s post-Brexit property market, announcing it will float a new investment company focusing on UK commercial real estate.

 

Google’s Waymo self-driving car fleet is hitting public roads with NO human driver as Uber style ride-hailing service: Waymo, the driverless car arm of parent company Alphabet, revealed the “next phase” of the project, which is one of the most developed in autonomous vehicle in the world.


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