LONDON MARKET OPEN: Bonmarche Drops After Retail Mogul Day Makes Offer

LONDON (Alliance News) - Stock prices in London opened higher on Tuesday following a strong close ...

Alliance News 2 April, 2019 | 8:52AM
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LONDON (Alliance News) - Stock prices in London opened higher on Tuesday following a strong close in the US overnight, with the FTSE 100 supported by weakness in the pound, which slipped amid yet more Brexit uncertainty.

The EU's chief Brexit negotiator, Michel Barnier, warned on Tuesday that it is becoming more likely that Britain will leave the bloc without a negotiated deal, after lawmakers in London again failed to outline a way forward.

The FTSE 100 index was up 48.57 points, or 0.7%, at 7,365.95. The FTSE 250 was up 48.28 points, or 0.3%, at 19,287.04, while the AIM All-Share index was up 0.1% at 918.64.

The Cboe UK 100 index was up 0.2% at 12,446.58. The Cboe UK 250 was up 0.2% at 17,262.64 and the Cboe UK Small Companies flat at 11,175.71.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.8% and 0.9% respectively in early trade.

In the FTSE 100, Anglo American was up 1.2% after Deutsche Bank raised the miner to Buy from Hold.

Diageo was up 0.9% after Barclays started coverage on the distiller with an Overweight rating.

At the other end of the large cap index, AstraZeneca the worst performer, down 1.2% after UBS downgraded the Anglo-Swedish drugmaker to Sell from Hold.

J Sainsbury was 0.6% lower following the release of the latest grocery data from Kantar Worldpanel.

In the 12 weeks to March 24, Kantar said Sainsbury's market share fell to 15.3% from 15.8%, leaving it overtaken as the UK's second largest supermarket chain by its own bid target Asda at 15.4%.

Conversely, Tesco was up 0.4% despite data from Kantar showing that the UK's largest supermarket chain's market share slipped to 27.4% from 27.6%.

BHP Group was down 0.5% after the Anglo-Australian miner said it will be reviewing its 2019 production guidance following disruption caused by Cyclone Veronica in Australia.

The storm has not caused any major damage at Port Hedland in Western Australia, BHP said, but flooding has hampered the movement of trains. As a result, Port Hedland, part of BHP's iron ore arm, is operating at a reduced rate and will continue to do so until later in April.

BHP said an early estimate of the impact will see 2019 production fall by around 6 million to 8 million tonnes, and it is also reviewing unit cost guidance. A further update will be provided after further work is carried out, it said.

In the FTSE 250, Wizz Air was the best performer, up 4.5% after the central and eastern Europe-focused airline said it expects its annual net profit for the year ended March to come in towards the upper half of its guidance range of between EUR270 million and EUR300 million. A year ago, Wizz Air's net profit amounted to EUR275 million.

This was after fourth quarter trading in line with expectations and "robust" demand across the company's key geographical territories, Wizz Air explained.

Looking ahead, Wizz Air said it started the new year well, forecasting a 4.0% increase in revenue per available seat per kilometre in the first quarter.

Meanwhile, larger peer Ryanair Holdings was down 1.7% after saying March passenger numbers rose 9.0% to 10.9 million. Ryanair also said its pilots based in Portugal voted in favour of a collective labour agreement governing pay and conditions for the next four years.

Ashmore Group was up 3.0% after Merrill Lynch raised the emerging markets-focused asset manager to Buy from Neutral.

Elsewhere, Bonmarche Holdings was down 17% at 15.0p after Spectre Holdings, a Dubai-registered company 100% owned by Edinburgh Woolen Mill owner Philip Day, announced a mandatory cash offer for women's clothing retailer after taking a 52.4% stake.

The 11.445 pence per share offer values Bonmarche at GBP5.7 million, a 34% discount to its GBP8.7 million market value Monday's close. Spectre pointed to a significant decline in Bonmarche's profitability and said it could offer advice and support.

It noted that Day "has a successful track record within the retail sector, especially in turnaround and distressed situations".

Edinburgh Woollen Mill Group owns high street clothing chains Peacocks, Jaeger, Jane Norman, and Austin Reed.

The Japanese Nikkei 225 index ended flat. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong is up 0.1%.

"Asia markets took their cues from the strong sessions in Europe and the US, closing higher for the second day in succession, as investors looked to the restart of trade talks between the US and China in Washington this week. European markets have also opened higher with the FTSE 100 outperforming due to the weaker pound," said CMC Markets analyst Michael Hewson.

The pound was quoted at USD1.3030 Tuesday, down from USD1.3118 at the London equities close Monday.

UK Prime Minister Theresa May will seek to break the Brexit deadlock as she gathers her Cabinet for a marathon session of crisis talks in Downing Street.

The prime minister and her senior ministers will take stock after members of Parliament again failed to find a majority for a series of alternatives to her Brexit deal.

A call for a customs union with the EU was rejected by just three votes, while a demand for a second referendum was defeated by 12 and a Norway-style deal put forward by Nick Boles by 21.

To cap a dramatic day in the Commons, Boles immediately declared that he would no longer sit as a Conservative MP, blaming the party for refusing to compromise on a means of leaving the EU.

Cabinet will meet on Tuesday for five hours to thrash out a way forward.

"With the Tory Party fractured almost to the point of irreparability, a 5-hour slog of a Cabinet meeting is pencilled in for Tuesday, as Theresa May tries to find a Brexit path that can actually get through Parliament. A no-deal exit, or even a snap election, are now increasingly likely options, with neither route one sterling will happily walk down," said Spreadex analyst Connor Campbell.

In Tuesday's economic calendar, the UK's construction PMI is at 0930 BST while eurozone producer prices are at 1000 BST and US durable goods orders are at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Wizz Air Holdings PLC 3,468.00 GBX 0.49 -
Bonmarche Holdings PLC 16.25 GBX 4.84 -
Sainsbury (J) PLC 227.70 GBX 0.49
Ryanair Holdings PLC 12.59 EUR 1.12 -
Tesco PLC 250.10 GBX -0.08
AstraZeneca PLC 5,815.00 GBX -1.67
Anglo American PLC 2,169.50 GBX 0.37
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