FTSE 100 Live: BA, Rolls Royce and travel stocks plunge on Europe Covid lockdown threat

·16-min read
 (ESI)
(ESI)

FTSE 100 Live Friday

  • Travel stocks & FTSE 100 lower on Austria lockdown

  • Early Christmas shopping boosts ONS retail sales

  • Ryanair set to delist from London

FTSE closes lower as European lockdowns shake confidence

Friday 19 November 2021 17:01 , Oscar Williams-Grut

The FTSE 100 has closed down 33 points at 7223 as lockdowns in Europe shake investor confidence.

British Airways-owner IAG sunk 3.7% and Rolls-Royce, which makes airline engines, fell 3.8%. Travel stocks were hit after Austria announced a 20-day nationwide lockdown from Monday and Germany’s health minister said he could not rule out new lockdowns as infections surge across Europe.

At the top of the FTSE were stocks that stand to do well in a Covid surge and possible lockdown: Ocado, the online supermarket, rose 6/8%; Reckitt Benckiser, which makes hand wash and disinfectant, ended 2.3% higher; and Royal Mail, which was buoyed by the surge in online deliveries during lockdown, rose 3.7%.

That’s all from us this week on the blog. Join us again next week.

‘Limp’ end to the week for stocks

Friday 19 November 2021 16:05 , Oscar Williams-Grut

Neil Wilson, chief market analyst at Markets.com, says global stock markets are ending the week “limp”. He says:

Stocks are ending the week in a bit of a mixed mood, but more half empty than half full.

Value/cyclicals on the back foot with bond yields down, tech bid for the same reason. Losses in Europe running around 0.3-0.5% for the main bourses. Looks like the sluggishness in Europe is driving some profit-taking in the US outside of the tech space, energy under pressure from residual weakness in oil.

Austria’s lockdown and likely lockdowns in Germany put European stock markets into a downwards gear shift earlier in the session and we are holding losses into the close.

Nomura: Lockdowns could curb inflation

Friday 19 November 2021 15:44 , Oscar Williams-Grut

City chatter is dominated by the possibility of further lockdowns across Europe.

Nomura’s European Economics team has just put out a note saying the following:

Virus case numbers are rising across Europe and governments are responding by reimposing restriction measures, which may seriously suppress the recovery – and thereby potentially medium-term forecasts for inflation too.

In turn, markets have pared back expectations for an ECB rate hike in the second half of next year.

In slowing demand, the rise in case numbers and threat of restrictions in the UK may yet reduce the need for the BoE to act – though this week’s stronger data (prices, jobs, spending, confidence) continue to suggest a small hike in December wouldn’t go amiss. That could still be off the table in the event of another Christmas lockdown.

In short, the virus and associated restrictions could yet end up doing the job of the central banks by taking demand out of the system and reducing the medium-term settling point for inflation.

European markets remain lower in afternoon trade. The FTSE 100 is down 37 points at 7219.

FTSE 100 lower in afternoon trade

Friday 19 November 2021 14:40 , Oscar Williams-Grut

The FTSE 100 continues to be dragged lower by travel companies as sentiment is hit by fresh lockdown in Europe.

The topflight index is down 18 points at 7237 in mid-afternoon trade. British Airways-owner IAG is down 3% and Rolls-Royce, which makes airline engines, is down 3.1%. Travel stocks are getting hit after Austria announced a 20-day nationwide lockdown from Monday and Germany’s health minister said he could not rule out new lockdowns as infections surge across Europe.

At the top of the FTSE are stocks that stand to do well in a Covid surge and possible lockdown: Ocado, the online supermarket, is up 7.4%; Reckitt Benckiser, which makes hand wash and disinfectant, is 2.6% higher; and Royal Mail, which was buoyed by the surge in online deliveries during lockdown, is up 2.%.

Entain’s play for Olympic

Friday 19 November 2021 13:28 , Simon Freeman

Takeover prey turned predator Entain is reported to be on the prowl again.

The FTSE gaming group is said to have offered more than $1 billion for Olympic Entertainment - one of the Baltic's largest casino and online gambling companies.

Olympic is one of the few assets remaining from the €1billion portfolio of London-based PE firm Novalpina Capital, which also held a major stake in Israeli spyware maker NSO Group.

Investors voted to move the management of Novalpina's holdings to Californian consulting firm Berkeley Research Group in July, amid internal turmoil.

A sale of Olympic could help backers of the fund recoup all of their investment with a profit, sources told Bloomberg.

Novalpina bought Olympic in 2018 for $325 million, and it has grown through acquisitions into Romania and Croatia.

Entain has itself been the target of two takeover attempts: DraftKings walked away from a potential $22 billion deal in October, and MGM Resorts made a $11 billion tilt earlier this year.

It turned the tables to buy Swedish gaming company Enlabs AB earlier this year.

None of the firms has yet commented on the report.

Fintech Mode sinks as bitcoin cashback scheme unravels

Friday 19 November 2021 12:49 , Oscar Williams-Grut

Shares in a London-listed fintech business crashed today after claims it was working with some of the UK’s top retailers on a bitcoin cashback scheme crumbled.

Mode Global sunk as much as 20% at the open after it was forced to issue a “clarifying statement” on the scheme launched just a day earlier.

Mode said on Thursday it was launching bitcoin cashback in partnership with 40 retailers next year, including Ocado, Homebase and Boots. CEO Ryan Moore said the announcement was a “major step” that would help put “Bitcoin into the hands of millions of customers across the UK.”

Chair and founder Jonathan Rowland, the son of the Duke of York’s close friend and advisor David ‘Spotty’ Rowland, tweeted that Mode was “delivering as promised” and suggested his business had “made contact” with Amazon. Shares surged as much as 16%.

Ocado, Homebase and Boots all subsequently denied being involved in the project.

Read the full story.

BA, Rolls Royce down 5% amid Europe lockdown fears

Friday 19 November 2021 12:39 , Simon Freeman

 (AFP via Getty Images)
(AFP via Getty Images)

Shares in British Airways owner IAG and Rolls-Royce are both falling fast on the FTSE 100 as bleak news emerges from Europe over fresh lockdowns.

IAG is down more than 5% to 154.32p, a two-month low.

Aircraft engine maker Rolls, whose revenues depend on hours flown, fell 5.7% to 133.56.

Rising gloom over a bleak Christmas is weighing on sentiment with easyJet also down 5% to 544.8p and TUI falling 4.5% to 204.9p.

Wizz Air (-4.6%) and food travel group SSP (-5%) joined the pity party.

Ocado, a bellwether of the stay-at-home stocks, was surging back- up by almost 10% to 1941p.

At lunchtime, the FTSE 100 is down 47 points to 7207 and the FTSE 250 falling 136 to 23437 despite a positive surprise from retail data .

The Stoxx Europe 600 tumbled after Germany’s health minister said he could not rule out new lockdowns as infections surge across the bloc. Cases are now doubling every 12 days.

The euro is down 0.4% against the pound to £1.19 and 0.74% against the dollar at $1.13.

Angela Merkel has agreed to restrict access to restaurants, bars and public events for the unvaccinated in hard-hit areas.

Austria is entering a 20-day nationwide lockdown from Monday.

Craig Erlam, analyst at OANDA, said: "Europe has turned red on Friday as a new lockdown in Austria and the prospect of similar action in Germany wiped out earlier gains and forced stock markets down close to 1%.

"The situation is not quite so severe in other countries like France, Italy and Spain but that could change in the coming weeks, as we saw around the same time last year.

"High vaccination rates mean the link between case numbers and fatalities is far lower but the former is rising at a remarkable rate which is clearly making it very hard to ignore."

Bitcoin under pressure

Friday 19 November 2021 12:29 , Oscar Williams-Grut

The price of bitcoin is coming under sustained selling pressure today. The world’s biggest cryptocurrency is down $2,654, or 4.4%, to $57,157.

Bitcoin has now sunk over 15% since reaching a record high above $68,000 just over a week ago.

Bank of America said today that “financial conditions [are] starting to tighten on froth” and cryptocurrency could be among “the next dominoes to fall.”

Bitcoin has risen around 100% so far this year as investors piled into the cryptocurrency, partly as a hedge against inflation. Those bets are starting to unwind as investors conclude that central banks in the US and UK and likely to put up interest rates soon.

Jai Bifulco, CCO at Kinesis Money, said: “Traditionally, when inflation skyrockets and uncertainty creeps into the markets, investors flock to safe haven assets to protect their wealth against the eroding value of the dollar. Recently, Bitcoin has drawn the focus of capital that might usually have been driven to gold investment during this time of economic uncertainty.”

Rapper checked

Friday 19 November 2021 11:27 , Simon Freeman

 (Instagram /  Burberry Jesus)
(Instagram / Burberry Jesus)

Burberry has won a landmark legal battle with a US rapper who styles himself ‘Burberry Jesus’ and floods social media with selfies draped in the fashion house’s signature plaid.

The FTSE 100-listed luxury retailer has been awarded costs and fees of almost $140,000 (£100,000) after a federal court in Chicago ruled the musician was infringing its trademark.

Yarbrough was accused of going to “great lengths to create a Burberry-dependent persona,” including using its logo on artwork and wrapping cars in its copyright-protected check.

Burberry says it undertook “extensive efforts” to resolve the dispute in an “amicable” manner before deciding he had "no intention" of complying with its requests.

Neither party has commented on the decision. Yarbrough’s public social media profiles have been removed or made private.

Austria lockdown weakens travel stocks, FTSE 100 lower

Friday 19 November 2021 10:41 , Graeme Evans

More strong sales figures from B&Q failed to stop shares in owner Kingfisher sliding today amid City fears that weary DIYers are planning a home improvement breather.

The group, which also owns Screwfix, believes “enduring” industry trends created by the pandemic, such as working from home, will continue to support demand.

Its third quarter figures appeared to support this, with B&Q's like-for-like sales still 17.1% higher on pre-pandemic levels and the wider company also forecasting sales and profits at the top end of expectations for the year to January.

Despite gaining market share and reassuring on product availability, the Europe-wide retailer tumbled 5% in the FTSE 100 index as longer-term jitters were fuelled by the company's lack of guidance on 2022 trading.

Shares dropped 16.6p to 320.6p but are still 17% higher in the year to date.

Alongside Kingfisher, the consumer goods giant Unilever was lower as investors gave a lukewarm reception to the £3.7 billion sale of the company's P&G Tips and Lipton tea division to CVC Capital Partners.

The Marmite and Knorr owner fell after the deal was announced yesterday afternoon and dipped another 10.5p to 3812.5p today.

Travel-focused stocks were lower after Austria imposed new lockdown restrictions, forcing the FTSE 100 index to relinquish early gains. it stood 23.37 points lower at 7232.59 in the top flight's worst weekly performance in two months.

Mining stocks provided some support after a rebound for the copper price, while grocery technology stock Ocado topped the risers board with a jump of 6% or 107p to 1883p. Royal Mail shares also remained popular among investors, rallying another 11.6p to 492.3p after its £200 million special dividend announced yesterday.

The Austria lockdown amid Europe's renewed surge in Covid-19 case numbers weighed on several holiday stocks in the FTSE 250 index as easyJet fell 25.8p to 544.8p and TUI eased 9.4p to 205.3p.

The FTSE 250 index dropped 126.85 points to 23,449.37, but Marks & Spencer held firm at 236.1p as Deutsche Bank raised its price target to 265p in the latest City upgrade for the rejuvenated retailer.

Great Portland Estates upgrades rental value growth outlook and rebrands

Friday 19 November 2021 10:28 , Joanna Bourke

London property developer Great Portland Estates has upgraded rental growth forecasts, at a time when business demand for offices is improving.

The FTSE 250 firm expects rental values to improve between 2% and 5% in the year to March 2022. It had previously guided a flat performance.

Boss Toby Courtauld said the firm is seeing “healthy growth in office jobs which is driving renewed occupier demand for City and West End offices”.

The landlord also said it has rebranded to GPE.

Courtauld said: “The new identity is a natural extension of how we are already known in the market.”

Wincanton drives up profits, despite lorry driver recruitment difficulties

Friday 19 November 2021 09:28 , Joanna Bourke

The chief executive of Wincanton has said the challenge of grappling with the “perfect storm” behind lorry driver shortages remains, but the logistics giant can cope.

James Wroath was speaking as the transport and warehouses firm boosted pre-tax profits by 31% to £25.1 million in the half year to September.

A year earlier it did face more disruption costs at the start of the pandemic. But profits this year have also benefited from new contract wins and more work with existing retail customers, some of which saw online orders surge during lockdowns.

Read more HERE.

Don’t panic over rate rise -- Nationwide CEO

Friday 19 November 2021 09:17 , Simon English

FAMILIES need not fear a small rise in interest rates, says the boss of Nationwide Building Society, as he unveiled a near three-fold leap in half-year profits to £850 million.

As a mutual, those profits will be used to benefit the 16.3 million members, which include 30,000 new first-time buyers in the last six months.

Outgoing CEOJoe Garner said a widely expected rise in interest rates needn’t be a problem.

read more here

Ryanair set to delist from London

Friday 19 November 2021 08:55 , Oscar Williams-Grut

Ryanair has confirmed plans to delist its shares from the London Stock Exchange in response to EU rules on ownership post-Brexit.

The Irish budget airline said it planned to apply to authorities to cancel its listing on the main market in London “as the volume of trading of the Shares on the London Stock Exchange does not justify the costs related to such listing and admission to trading.”

Ryanair first flagged it was considering delisting at the start of the month. The company said trading on the LSE has “reduced materially” as a percentage of its overall shares activity during 2021.

Read the full statement.

Ocado sets pace in FTSE 100

Friday 19 November 2021 08:48 , Graeme Evans

Sterling briefly touched 1.35 against the US dollar after encouraging retail sales figures fuelled expectations for a hike in interest rates next month. The pound also lifted 0.25% on the euro at 1.19, revisiting the seven-month high seen earlier this week.

The FTSE 100 index climbed 24.84 points to 7280.80, in line with Europe as the Dax and Cac40 continue to trade at record highs.

London's improvement was driven by the mining sector, while grocery technology stock Ocado surged 5% or 94.5p to 1870.5p.

B&Q owner Kingfisher slumped 4% or 13.2p to 324p, despite upgrading sales and profit expectations and highlighting strong product availability.

Marks & Spencer gets upgrade

Friday 19 November 2021 08:04 , Graeme Evans

Marks & Spencer continues to win over the City, with Deutsche Bank's Adam Cochrane the latest analyst to praise the strategy of chairman Archie Norman and chief executive Steve Rowe at the helm of the rejuvenated retail chain.

The company's shares have soared in recent weeks following two positive trading updates, prompting Cochrane to raise his price target this morning by 36% to 265p. The stock opened today at 236.2p, having risen 28% in the past month.

Cochrane said: “The most impressive part of the M&S business transformation is the ongoing acceleration in speed of change within the organisation. As a British institution, change was previously slow at M&S with a risk averse attitude to material change.

“In our view, the chairman (alongside a pandemic) has given air cover for change and this has enabled a strong bench of executive talent to deliver the required changes.”

UK retail sales rebound, up 0.8% in October

Friday 19 November 2021 07:53 , Joanna Bourke

Consumers starting Christmas shopping earlier than usual helped push up October retail sales in stores and online by 0.8%.

That was up from the prior month, and the Office for National Statistics said the figure was 5.8% ahead of pre-pandemic levels in February 2020.

It marks the first monthly rise since April, when non-essential retailers could reopen from lockdowns.

Read more HERE.

Consumer confidence shows improvement

Friday 19 November 2021 07:53 , Graeme Evans

GfK’s consumer confidence index increased three points to minus 14 in November, despite decade-high inflation, fears of higher prices and worries over rising interest rates.

Alongside the modest improvement in the overall headline figure, retailers will be cheered by a seven-point jump in major purchase intentions in the run-up to Black Friday and Christmas.

The view on the general economic situation over the past year and year to come also improved six points and three points respectively, but GfK said consumers are slightly less buoyant on their personal finances.

Alibaba shares slump on cautious outlook

Friday 19 November 2021 07:37 , Graeme Evans

Fresh records for Wall Street's Nasdaq and S&P 500 have raised the prospect that London's FTSE 100 index might still avoid its worst weekly performance in over two months.

CMC Markets is calling the blue-chip index to open 30 points higher at 7286, having seen the London market on the back foot for most of this week due to inflation jitters and yesterday's weak session for commodity-based stocks.

Asia markets were mixed overnight, with Tokyo's Nikkei 225 up 0.5% on the prospect of prime minister Fumio Kishida delivering a bigger than expected stimulus package to the country’s economy worth $690 billion.

Hong Kong's Hang Seng index was down more than 1%, driven by pressure from China's internet retail giant Alibaba after it downgraded its outlook for 2022 and missed sales estimates for the second quarter.

The company now thinks it will grow at the slowest pace since listing on the stock market in 2014, although revenues for the September quarter were still 29% higher.

Alibaba's shares fell by around 11%, adding to concerns about the health of China’s economy.

US stock futures provided some cheer and are pointing to further progress today following last night's latest batch of earnings updates.

Brent crude traded below $80 a barrel yesterday but the respite triggered by the plans of major oil consuming nations to release strategic reserves looks to have been short lived as the price stood at $81.89 this morning.

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