UK stocks gave up their meagre early gains as US Treasury yields moved higher after weekly jobless claims from the Labour Department were lower than the market was expecting.
US futures also turned lower as the low claims figure stocked fears of rising inflation and ultimately a rise in interest rates.
By midday the FTSE 100 index was down 71 points or 1.1% to 6,641 points with weakness in energy and mining stocks offsetting gains in house builders.
Brent oil continued its recent weakness and dropped a further 2% to $62.50 per barrel while sterling was unchanged against the US dollar at 1.368.
CORPORATE NEWS
Pharmaceutical giant AstraZeneca (AZN) said positive high-level results from the US phase three trial of its Covid-19 vaccine confirmed efficacy was consistent with the interim analysis announced on 22 March.
However, the overall effectiveness was lower at 76% compared with 79%.
The company said it would look to filing a regulatory submission for Emergency Use Authorization in the US in the coming weeks. Shares traded sideways at £71.33.
In at trading update United Utilities (UU.) said it expected revenues to be 3% lower as a result of a reduction in consumption from businesses largely offset by increased consumption from households as people spent more time at home during lockdowns.
Underlying operating profit for the 2020/21 financial year is expected lower reflecting lower revenues and higher infrastructure renewals expenditure. The shares dipped 0.1% to 909p.
In a pre-close trading update food service company Compass Group (CPG) said interim organic revenues for the six months to 31 March 2021 are expected to be down around 31%, running at 71% of 2019 revenues.
Operating margin is expected to increase around 1.3% from 2.7% in the first quarter to 4% in the second, resulting in a first half margin of 3.2%. Shares reversed their earlier gains, shedding 0.5% to £14.63.
CINEMA WOES
A positive outlook from cinema operator Cineworld (CINE) failed to lift its shares which sank 8% to 94.7p after reporting full-year pre-tax losses of $3 billion, compared with a profit of $212.3 million last year as revenue fell 80.5% to $852.3 million.
Cineworld also suffered a hit from asset write downs of $1.34 billion. The company said it expected strong pent-up demand post-reopening as indicated by markets that had reopened such as China, Japan and Australia.
In a separate announcement the company said it had secured binding commitments for a new $213 million convertible bond due in 2025. The bond has a coupon of 7.5% and can be converted into shares at 128.5p per share.
Along with a tax refund from the US CARES Act, the bond will provide a liquidity runway to year-end if cinemas remain closed.
However, the company added that ‘term loan lender support’ may be required if there are further delays to reopening.
Under current rules, sites are expected to open in the US, UK from 2 April and 17 May respectively.
Broadcaster ITV (ITV) said it had acquired a minority stake in what3words, an accessible location service, for £2 million.
The deal, which included an option to invest a further £2 million, marked the ITV's first investment under its a ‘Media for Equity’ programme that sees the company take stakes in early stage digital and direct-to-consumer businesses, alongside venture capital investment, in return for advertising inventory. Shares eased 0.4% to 124.5p.
EARNINGS UPGRADE
Shares in online trading company CMC Markets (CMC) surged 4% to 461p after upgrading its outlook on annual profit following strong fourth-quarter performance.
For the financial year ended 31 March 2021, net operating income was now expected to be 'slightly ahead' of the upper end of the current range of consensus of £399.61 million, the company said.
For fiscal 2022, the company raised its expectations to deliver net operating income in excess of £330 million.
A list of movers can be seen here.
