The bleak mood continued to drag on the UK’s leading shares at lunchtime with the squeeze on global energy prices continuing to send markets lower. Across the pond, US shares are expected to continue their falls when Wall Street opens, with the Dow Jones, S&P 500 and Nasdaq all seen sliding between 0.4% and 0.5%.
Confidence in stock markets has taken a dip in sync with a report that UK business confidence has fallen off a cliff in recent weeks. The Institute of Directors’ economic confidence index has dropped back to negative levels last seen in February, at the height of the country’s third lockdown.
In energy markets, Brent crude eased 0.7% to $77.79 per barrel, gold was flat at $1,742.8 per ounce, while leading cryptocurrencies gained ground. Bitcoin, the best-known of the bunch, was up 4% at $44,868.90.
At midday, the benchmark FTSE 100 was down 71 points, or about 1%, at 7,014.80, with defensive sectors such as utilities and consumer staples managing to eke out gains while industrial and consumer discretionary stocks bore the brunt of the selling.
The mid-caps were also under heavy selling pressure, the FTSE 250 index down 0.7% at 22,858.72.
COMPANIES ON THE MOVE
Online domestic electricals retailer AO World (AO.) saw its share price collapse accelerate through the morning session, with the stock slumping 20% to 173.2p, after a disappointing first half trading update.
Sales were up just 5% in the six months to September due to slowing demand, more competition online, supply chain disruption and a shortage of delivery drivers in the UK.
The firm said it expected similar sales growth in the second half and full year earnings before interest, taxes, depreciation and amortisation (EBITDA) of between £35 million and £50 million compared with a consensus forecast of £52.5 million.
Shares in pub group JD Wetherspoon (JDW) were largely steady (down 0.3%) at £10.40 after the firm posted a tough set of full year results for the period to July, with like for like sales down 38% and pre-tax losses soaring from £44.7 million to £167 million.
‘In the last year, the country moved, in succession, from lockdown, to 'Eat Out to Help Out', to curfews, to firebreaks, to pints with a substantial meal only, to different tier systems and to further lockdowns’, observed chairman Tim Martin.
The six-month long battle for control of supermarket group Morrisons (MRW) looks like being resolved this weekend in an auction between US private equity firm CD & R and a consortium led by Softbank-owned investment group Fortress.
CD&R, which has been advised by former Tesco (TSCO) boss Terry Leahy, has pitched its offer at 285p per share but under the auction rules both sides are free to raise their price in up to five rounds of bidding. Morrison shares traded sideways at 295.3p, suggesting investors expect a higher offer.
Convenience food maker Greencore (GNC) reported an improvement in revenues, profits and cash flow in the fourth quarter thanks to a recovery in its food to go business as more people return to the office.
The sandwich and quiche producer posted pro-forma sales up 27% in the quarter to September and said it expected operating profits to towards the top end if its guidance range of £36 million to £40 million. Despite the positive update the shares fell almost 4% to 136p.
EARLY INVESTORS SELL-OUT
Shares in cyber security star Darktrace (DARK) reversed much of their earlier 11% slump to post a lunchtime 3% decline to 793.5p in the wake of major shareholders, including private equity firm KKR, selling 25 million shares at 750p against a closing price last night of 820p.
The early exit was facilitated by the investment banks which ran the float agreed to waive the usual lock-up agreements.
Gulf Marine Services (GMS) saw its earlier 9% gains pared back to around 4% at 3.85p after reporting a small increase in first half revenues to $51.4 million but a significant increase in EBITDA to $26.5 million thanks to lower operating expenses and interest costs on its debt.
The firm, which supplies vessels to the offshore energy industry, said it has a secured order backlog of $215 million as of the end of June and a ‘strong’ pipeline of long-term contracts under tender.
Alternative asset manager Gresham House (GHE) announced it had acquired the venture capital trust business of Mobeus Equity Partners, adding £369 million of assets and making the firm a ‘leading player’ in the sector with £850 million of assets under management. Shares added 0.4% to 910p.
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