UK stocks advanced on Monday with the FTSE 100 adding 10 points to 6,750 points despite concerns around losses building up at hedge funds and investment banks due to the market volatility of the last few months.
Traders are eyeing the US open with caution after a 'fire sale' of technology stocks by a major US broker on Friday, said to be related to a large private investment firm, with fears there could be more sales to come.
Goldman Sachs dumped $10.5 billion worth of US-listed shares including Chinese high-fliers Baidu and Tencent along with shares in Discovery, Farfetch, GSX Techedu and Viacom, with some share prices falling 40% as a result.
Japanese broking firm Nomura flagged a potential $2 billion loss due to ‘transactions with a US customer’, which the market took to be related to the liquidation trades.
At the same time, Swiss bank Credit Suisse said it could suffer a ‘material impact’ after one of its hedge fund clients defaulted on its margin commitments and the bank was forced to sell some of the fund’s positions.
COMPANY NEWS
In a thin day for corporate reporting, investment platform AJ Bell (AJB) raised its full year revenue guidance after ‘strong customer acquisition’ in the six months to March and elevated levels of customer dealing.
While the firm said it expected activity to moderate in the six months to September, it already sees revenues at least £6 million above market forecasts. Shares added 1.8% to 416p.
There was also positive news from biotech firm Destiny Pharma (DEST:AIM) which announced positive top-line results from Phase 2b clinical trials of its XF-73 nasal gel to prevent post-surgical infection by MRSA.
As well as meeting its endpoints ‘with an exceptionally high statistical significance’, the treatment showed no negative side effects. Shares jumped 19% to 190p.
Customer relationship management software provider Cerillion (CER) revealed it had signed its largest ever contract, worth $18.4 million over 10 years, with a full-service telecom network operator in Latin America.
The order comes on the heels of recent major new customer wins in Europe and the Middle East. Shares climbed 10% to 445p.
Indoor activity centre operator Ten Entertainment (TEG) posted a 57% drop in revenues for the year to December and an operating loss of £7.9 million against a profit of £23.6 million, but said it was ‘operationally fit for purpose’ and ready to re-open as soon as restrictions are lifted.
The firm also said it was well-placed to benefit from a cut in capacity in the UK leisure market as rivals struggle, with £18 million of liquidity headroom. Shares eased 2% to 230p.
Biofuel maker Quadrise Fuels (QFI:AIM) posted a first half loss of £2.3 million, similar to the previous year, but said it had sufficient funds in place to progress to commercial revenues and sustainable cash generation by July next year, assuming positive tests and trials lead to commercial contracts. Shares dipped 0.2% to 3.4p.
Online food delivery firm Deliveroo, which floats on the London market on Wednesday in what could be London’s biggest listing for a decade, said it had seen strong investor demand for its shares despite several large institutions saying they would avoid the stock due to governance concerns.
Shares are expected to be priced in a range between 390p and 460p giving the firm a market value of £7.6 billion to £8.8 billion.
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Disclaimer: AJ Bell is the owner and publisher of Shares magazine. The author owns shares in AJ Bell.
