FTSE 100 swings back to the green; Aldi joins fellow supermarkets in repaying business rates relief

  • FTSE 100 adds 3 points
  • to pay back £100mln to the government
  • Is a Brexit deal round the corner?

11.35am: Aldi joins fellow supermarkets in repaying business rates relief

FTSE 100 swung back to the green before lunchtime, adding 3 points to 6,467.

Aldi has joined its fellow supermarkets in vowing to repay the business rates relief it has received during the pandemic.

The discount grocery store chain will pay £100mln back to the UK Government.

The move comes hours after Wm Morrisons Supermarkets PLC () and () vowed to waive the offer of business rates relief after trailblazer () surprised the markets on Wednesday morning.

The FTSE 100-listed supermarkets group decided not to accept its £585mln of business rates relief, which the government offered all retailers to cope with the effects of the coronavirus pandemic.

Morrisons pledged to pay its full £274mln of business rates, of which £230mln relates to the current financial year. This is versus total expected costs of £270mln from the pandemic, which is £40mln more than its previously guidance.

For Sainsbury’s, the amount of rates relief to be forgone is £450mln, of which £410mln relates to the current year. It said direct Covid costs were £290mln in the first half of the year.

10.40am: Mounting hopes for Brexit deal

The Footsie halved its losses and was only 11 lower at 6,451 in late morning, while sterling was trading 0.3% higher at US$1.3411.

Markets are hoping to see a Brexit trade deal sealed over the next few days.

EU and UK negotiators are planning to review the progress on Thursday and Friday, Reuters reported, while the deal may be finalised as soon as this weekend.

“It’s the time to hold our nerve and trust [EU chief negotiator] Michel Barnier. And I believe if we do that, there’s a good chance that we can get a deal across the line in the next few days,” Ireland’s Foreign Minister Simon Coveney told Newstalk Radio on Thursday.

“There will be no further extensions. There will be no extra time.”

However, there have been signs of strain among EU leaders, with France saying it could veto a deal in a move that could pressure Barnier not to give too much away, when it comes to fishing.

“While some of this noise is no doubt designed for domestic consumption, the reality is if France were to veto a deal, French fishermen would lose legal access to UK waters completely in the event of no deal,” said Michael Hewson, Chief Market Analyst at CMC Markets.

“A no deal would also rebound viciously back into Northern France, an area that already has very high structural unemployment.” 

“It could also be argued that the rise in tensions suggests that a deal could well be getting closer, and it is this urgency that is creating a concern about any new compromises that might be needed to get a deal across the line.”

9.45am: November lockdown depresses services sector but optimism remains high

FTSE 100 turned red in mid-morning and dropped 20 points to 6,443.

The UK services sector saw its first fall since June due to the November lockdown, however business optimism has hit a nine-month high as workers hope the recent vaccine news are the first step to end the pandemic.

The latest UK services PMI dropped to 47.6 in November, from 51.4 in October, falling below the crucial 50.0 no-change mark for the first time in five months although it topped the 45.8 flash estimate.

“New lockdown measures and tighter pandemic restrictions unsurprisingly tipped UK private sector output back into decline during November,” said Tim Moore, Economics Director at IHS Markit, which compiles the survey.

“However, the collateral damage on areas outside of hospitality, leisure and travel has been far more modest than in the first lockdown period. Back in April, nearly 80% of all service providers reported a monthly drop in business activity, while the equivalent figure was only 30% in November.”

8.40am: Small gain after big surge

The FTSE 100 made a subdued start to proceedings on Thursday after the index of top stocks was given a coronavirus (COVID-19) vaccine-related boost on Wednesday.

London’s blue-chip index opened just 3 points higher at 6,466.04.

The problem is now one of logistics and who exactly will receive the first limited batches of the /BioNTech jab with the NHS first in the queue.

In the meantime, experts are still suggesting the UK will be subject to tight restriction until spring – even if Boris Johnson has agreed to review the tier system in February.

That spells more economic hardship and probably further political turmoil, which was reflected in the morning’s rather tentative start to proceedings in the Square Mile.

Outside the UK, the pandemic looks set to get worse before the position improves with the US reporting 100,000 COVID-19 hospitalisations for the first time.

Turning to the corporate news headlines, Sainsbury () has followed Tesco’s () by handing over business rates support it received during the pandemic – £410mln in total.

On the market, bounce-back stock Rolls Royce () was the early Footsie leader with a 2.4% gain.

Hard on its heels and up 1.9% was Rio Tinto (), which led the mining sector higher. The ascent of the diggers Thursday followed a batch of better-than-expected economic data from China, a huge consumer of natural resources.

Sticking with the sector, Hochschild Mining () fell 16% after it was revealed its chairman plans to sell a 12% stake in the business.

Among the tiddlers, mattress firm Eve Sleep () led the charge higher. It shot up 22% after upgrading its revenue forecast.

Proactive news headlines:

PLC () has said it is to pay a special dividend worth more than the current share price following the sale of its stake in PLC. The special dividend payment is 42.75p per share, compared to a current share price of 35.5p, and is worth £15.5mln in total. Braveheart sold all of its shares in RMS for £17.4mln after the price rocketed on hopes for the anti-viral/coronavirus (COVID-19) face mask developed by Pharm2Farm which RMS acquired earlier this year in which the investment group had a big stake in. AIM-listed Braveheart said it made a profit of £402,000 (2019: £122,000 loss) in the six months to end September 2020 on revenues of £895,000 (2019:£250,000).

() (CVE:TXP) said the Ortoire exploration block in Trinidad continues to exceed expectations as it confirmed the completion of drilling at the Cascadura Deep-1 exploration well. Cascadura Deep-1 was drilled down to a total depth of 8,303 feet and was paused before reaching the planned depth of 10,600 feet because high-pressure gas zones were encountered while drilling. Nevertheless, the well encountered some 2,100 feet of the targeted Herrera sands across multiple stacked zones.

() said good sales of graphene-enhanced face masks will mean its sales beating forecasts in the current year to end December. Sales of G+ enhanced face masks, including Co-Masks, have been very popular both with individual and corporate customers, said Directa, while Setcar, the group’s Environmental division, has also contributed to the improved revenue expectations for the current year. As a result, total revenues for the year will be around €6mln (2019: £5.5mln), the AIM-listed group added. Directa Plus said it had also been granted a second patent on the equipment used to manufacture its graphene additives, which will boost capacity five times and lower maintenance costs.

() has reported a strong rise in profits in its first half as business was boosted by an accelerated shift to e-commerce during the coronavirus pandemic. In its results for the six months to October 31, 2020, the group reported a pre-tax profit of £14.3mln, up 38.2% year-on-year, while revenues increased 19.8% to £305.2mln. As a result of the improved earnings, the company’s interim dividend was hiked 14.3% to 4p per share, while cash generated from operations rose to £49.1mln from £19.1mln last year.

Zephyr Energy PLC () has told investors that Cyclone Drilling Inc has been hired for the ‘dual-use’ State 16-2 well which remains on-track to spud before the year’s end. Cyclone was selected via a competitive process including extensive technical and commercial evaluation, the company noted. Cyclone’s fleet of modern rigs was purpose-built for operating in the remote locations and rugged environment of the Rockies, it added. Zephyr also noted that Cyclone has recent experience drilling similar stratigraphic wells, including a 10,200-foot-deep stratigraphic well drilled in 2019 which was also part-funded by the US Department of Energy (DOE).

 () said the latest release of Imaging Biometrics’ (IB) StoneChecker software for assessing kidney stones has a number of important improvements that “point to a very a very exciting 2021” for the product. Developers have added workflow enhancements for retrieving computed tomography datasets as well as streamlining the reporting of the application’s output. IQ-AI said it is confident this latest release is “now positioned for widespread clinical adoption”.

() has reported higher revenues and wider mining margins over November, with the firm highlighting “extremely exciting” developments over the period in the cryptocurrency sector. In an update, the digital currency miner reported an average monthly mining margin of around 57% for November compared to 40% in October, while revenues generated for the period rose to £1.48mln from £1.2mln.

genedrive PLC () said data from an 11-month study of its molecular diagnostic device in neonatal intensive care will be ready in early 2021. Hospitals in Manchester and Liverpool used the assay to screen babies before administering certain antibiotics known to cause deafness. In all, around 750 infants were assessed using the MT-RNR1 ID kit.

IronRidge Resources Limited () has reported initial high-grade and broad low-grade drilling results from the third phase drilling programme at the Ehuasso and Ebilassokro and targets, both within the Zaranou Gold Project area. The African-focused minerals exploration company noted that the license borders with Ghana and is along strike from significant operating gold mines including Chirano – 5 million ounces (Moz) -Bibiani – 5.5Moz – and Ahafo – 17Moz. The group said initial reverse circulation (RC) and aircore (AC) drilling results for 4 metres (m) composites over the Ehuasso and Ebilassokro targets from the third phase drilling programme currently underway have been received, with highlights reported at a 0.1 grames per ton (g/t) cut-off and maximum 4m of internal dilution.

Group PLC () has seen a surge of new money into its green and sustainable investment funds over the past year. Assets under management jumped 34% to £20.2bn in the year to September 2020 (2019: £15bn), with net inflows more than doubling to £3.5bn (2019: £1.4bn). The influx of new money has continued into the current year, the fund manager said, with net inflows of £1.9bn boosting assets under management to £23.4bn as at the end of November.

() said it has established a new division, Live Company Sports and Entertainment Pty Limited (LCSE), which will focus on live sports, entertainment and music events. The AIM-listed media firm said the new division will target the fee-based promotion and organisation of global sports and entertainment events including motorsport, sailing, cycling, golf, music and lifestyle, adding that several existing contracts for events will be novated to LCSE’s South African subsidiary from Worldsport South Africa (WSSA). Live Company said the first event the division will focus on the largest participant based cycle race in the world, the Pick n Pay cycle tour, which is planned to take place in Cape Town in March 2021.

() has announced the launch of the D5 RIID, the world’s smallest high-performance radioisotope identification device. The ruggedised device, with ultra-low false alarm rate, is designed for military, homeland security and industrial use, the AIM-listed firm said. The D5 RIID was developed under a programme with the Defense Threat Reduction Agency of the US Department of Defense and detects a wide range of sources, including special nuclear material and mixed, shielded and heavily masked configurations, the supplier of detection technology noted.

(), the iron, copper and tungsten junior, has raised £650,000 through a placing at 0.4p per share to progress its three key projects. Directors and employees have also accepted £48,900 of their salaries in shares, with both the placing and salary shares having a warrant attached. Strategic Minerals said it needs to renew equipment at the Cobre magnetite stockpile and push ahead with work at the Leigh Creek copper mine (LCCM)  in Australia and the Redmoor tin/tungsten project in Cornwall.

() said it has closed the bookbuild for a share placing which is set to raise £5.28mln to be used to boost production at the West Rustavi field and recently acquired projects. The company, in a statement after Wednesday’s close launching the fundraise, had said it intended to bring in £5mln. An accelerated bookbuild process was undertaken by stockbroker Mirabaud Securities. It announced on Thursday that some 176mln new shares will be sold to investors at a price of 3p per share. Block shares closed at 4.15p on Wednesday, and were down 15% to 3.50p in early trade on Thursday, still above the placing price.

. () () has announced the completion of an extensive hand-auger drilling and soil sampling programme to identify rutile prospects within its 869 square kilometre Mchinji licence (EPL 0544/19) in Malawi,  The group said four geological teams have completed 75 auger drill holes containing 581 samples and a further 446 soil samples have been collected from a soil sampling programme on a regular 500 metre (m) sampling grid with 21 soil samples collected from other points of interest.

PLC () the AIM-listed metals exploration and development company said it has received notices to exercise warrants over 5,000,000 new ordinary shares of 0.1p each in the company at an exercise price of 0.7p pence per ordinary share. It added that subscription monies of £35,000 have been received by Power Metal in respect of these exercises.

6.50am: Back foot start predicted 

The FTSE 100 is set to start Thursday on the back-foot despite Wednesday’s news that the -BioNTech coronavirus (COVID-19) vaccine has been approved by UK regulators and could begin a rollout very soon.

CFD and spreadbetting firm IG has London’s blue-chip benchmark down around 20 points, making the price at 6,438 to 6,441 with just over an hour to go until the open.

It is something of a riddle just how much of the vaccine optimism has been priced into equities in London.

“It is understood that the first doses will be rolled out in a matter of days. In the past month there have been several leaps forward in the fight against the coronavirus which is fantastic, but dealers are mindful the mass vaccination process will take months,” said David Madden, analyst at CMC Markets.

“Yesterday, the FTSE 100 rallied over 1%, which on the face of it seems like the bullish move was driven by the vaccine news. The FTSE 250 is considered to be a better representation of the UK economy, and the index only closed up 0.17%.”

Wall Street put in a mixed session overnight. The Dow Jones Industrials Average closed Wednesday around 60 points or 0.2% higher at 29,883 while the S&P 500 similarly rose 0.18% to end the session at a new all-peak of 3,669.

At the same time, the Nasdaq Composite dipped slightly to finish Wednesday at 12,349 having reached record highs on Tuesday. Small-cap focused Russell 2000 meanwhile notched  up a 0.1% gain to mark the close at 1,838.

In Asia on Thursday, Japan’s Nikkei 225 was a sliver higher trading at 26,809 whilst Hong Kong’s Hang Seng was up 0.7% at 26,723. The Shanghai Composite meanwhile traded 0.18% lower at 3,443.

Around the markets

  • The pound: US$1.3386, up 0.16%
  • Gold: US$1,823 per ounce, up 11%
  • Silver: US$23.99 per ounce, down 0.3%
  • Brent crude: US$48.08 per barrel, up 1.4%
  • WTI crude: US$45.09 per barrel, up 1.2%
  • Bitcoin: US$19,008, up 0.95%

6.45am: Early Markets – Asia/Australia

Asia-Pacific shares were mostly higher on Thursday as China’s Caixin/Markit services Purchasing Managers’ Index for November came in at 57.8, rising from October’s reading of 56.8.

Japan’s Nikkei 225 rose 0.03% while South Korea’s Kospi gained 0.56%.

In Hong Kong, the Hang Seng index advanced 0.68% but China’s Shanghai composite slipped about 0.14%

Over in Australia, the S&P/ASX 200 gained 0.38%.

Proactive Australia news:

() will close its share purchase plan (SPP) to raise $2 million from eligible shareholders at 17 cents per share tomorrow (December 4).

() has received additional high-grade results from resource definition diamond drilling which infill and extend gold mineralisation at East Sampson Dam (ESD) prospect within the Silver Swan North Project in Western Australia.

() (OTCMKTS:ELLXF) (FRA:E8M) is encouraged by a United Nations decision to remove cannabis and its derivatives from schedule IV of the 1961 Single Convention on Narcotic Drugs following recommendations from the World Health Organisation (WHO).

() has received strong interest from potential participants for an Emryia-led study into irritable bowel syndrome (IBS).

() (FRA:QFP) has completed an update to the pre-feasibility study (PFS) released in May 2020 for its Butcherbird Manganese Project in the southern Pilbara region of Western Australia.

() (FRA:TN6) has confirmed the viability of recovering titanium during recent test-work for the Yarrabubba Iron-Vanadium Project with concentrates containing up to 48.5% titanium from non-magnetic tails streams.

() (FRA:6MU) has strengthened the exploration model for a large gold system at the Lake Austin Joint Venture with () (OTCMKTS:CAHPF) in WA where aircore drilling has generated multiple high-priority basement gold targets for follow-up drill testing.

Kin Mining Ltd () has received strong results at East Lynne and Collymore prospects within the wider Cardinia Gold Project (CGP) near Leonora in Western Australia with initial reverse circulation (RC) drilling producing grades of up to 6.1 g/t gold.

() is continuing to see record sales for the third month running, reporting the best November sales on record on the back of new wins and strength from its existing customer base.

() (OTCMKTS:EEYMF) (FRA:N9F) is buoyed by the output from Morila Gold Mine in Mali after completing the first month of production under Firefinch ownership.

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