UK stocks had accelerated their rally at lunchtime on Tuesday, extending the recovery from last week’s sell-off. Investors braced themselves for the contentious US Presidential Election in which Democrat Joe Biden remains the betting favourite to win.
Anticipation is high that he will have a more favourable trade policy with China and the EU, while the market is also counting on more stimulus measures to soften the economic impact from a second wave of new coronavirus infections.
By 1pm, the benchmark was 1.95% higher at 5,764.97. The more domestically-angled FTSE 250 was also firmly higher, up 1.6% at 17,458.47.
Fashion-to-groceries conglomerate Associated British Foods (ABF) lead the FTSE fallers on Tuesday despite pandemic-impacted annual results coming in a shade above consensus expectations, with a better than expected 34% decline in pre-tax profit to £914 million.
Investors focused on the uncertainty arising from the latest coronavirus-related lockdowns across the UK and Europe, with temporary store closures expected to lead to a massive £375 million loss of sales at discount fashion chain Primark, as the company’s decision not to propose a final dividend ‘whilst we monitor the impact of further Covid-19 restrictions on Primark during this important trading season’.
ABF shares fell 1.6% to £16.935.
Tobacco giant British American Tobacco (BATS) nudged 1.1% higher to £24.895 after its US business acquired the nicotine pouch product assets of Dryft Sciences, a US-based modern oral nicotine product company.
CREST NICHOLSON CLIMBS
Housebuilder Crest Nicholson (CRST) lost some of their earlier gains but were still nearly 18% up at 256.1p as the company announced it will reinstate its dividend after upgrading its profit outlook following a ‘good’ sales performance through the second half of the financial year.
‘Since the Spring lockdown we have traded well and as a result are pleased to announce an upgrade to earnings for the year,’ enthused chief executive Peter Truscott. ‘We also enter next year with a strong forward order book. Our disciplined focus on cash generation and capital allocation has ensured we close the year with an excellent cash position and a robust balance sheet.’
Industrial thread manufacturer Coats (COA) jumped 11% to 60.55p as the company upgraded its outlook on profit following improved trading performance.
Adjusted operating profit for 2020 is now expected to be ahead of market expectations and in the range of $100 million-to-$110 million. ‘The improving performance seen to date and trading outlook for the remainder of 2020 remains encouraging, however, we are mindful that uncertainties related to Covid remain around the recovery profile of our various global end markets as we look into 2021,’ cautioned the company.
Also in demand was Chemring (CHG), the defence company adding 6% to trade at 274.5p on news of new UK contract wins and that annual adjusted operating profit is now expected to be at the top end of current market expectations following a strong end to the year.
OTHER COMPANY NEWS
Elsewhere, engineer Weir (WEIR) gained 3.1% to £15.03 as it said demand had strengthened towards the end of the third quarter, bouncing back somewhat from very depressed levels as the coronavirus pandemic impacted the resources industry.
Serviced office provider IWG (IWG) rallied 7% to 272.5p, despite reporting a fall in third quarter revenue, on the news it is ‘now starting to see some improvement in our sales activity’.
Packaging firm DS Smith (SMDS) perked up 2.4% to 299p after it flagged improving market conditions and maintained its own financial performance guidance despite the obvious uncertainties around the pandemic.
