LONDON MARKET OPEN: Diageo Rises; William Hill Gives Back Some Gains

(Alliance News) - Stock prices in London opened sharply higher on Monday with Diageo giving the ...

Alliance News 28 September, 2020 | 8:57AM
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(Alliance News) - Stock prices in London opened sharply higher on Monday with Diageo giving the FTSE 100 a boost after issuing an upbeat statement about current trading.

The large-cap FTSE 100 index was up 62.21 points, or 1.1%, at 5,904.88. The mid-cap FTSE 250 index was up 172.01 points, also 1.1%, at 17,216.14. The AIM All-Share index was up 0.4% at 958.19.

The Cboe UK 100 index was up 1.2% at 586.92. The Cboe 250 was up 0.5% at 14,490.42, and the Cboe Small Companies flat at 9,024.05.

In mainland Europe, the CAC 40 in Paris was up 1.5% while the DAX 30 in Frankfurt was 2.0% higher early Monday.

Sentiment was supported after US House Speaker Nancy Pelosi said over the weekend that there was a chance that she and Treasury Secretary Steven Mnuchin can still reach a deal on a coronavirus US stimulus package and that Democrats will unveil a new offer shortly.

Meanwhile, investors will be keeping an eye on Monday's resumption of trade talks between Britain and the EU, hoping for a breakthrough despite feuding over a controversial UK bill that threatens to prevent a deal.

"The markets on Monday morning are supported by hopes for fiscal support in the US and progress in Brexit negotiations. Interestingly, the markets have managed to put aside the fear of the risks of an economic slowdown amid a near-record number of infections at the end of last week," said analysts at FXPro.

In the FTSE 100, Diageo was up 5.8% after the distiller issued an upbeat statement regarding current trading.

Diageo said it has made a good start to financial 2021 with improvements in its performance across all regions following the gradual re-opening of the on-trade channels such as in bars and hotels in most markets.

The FTSE 100-listed company continues to expect an improvement in organic net sales and operating profit for first half ending December 31, versus the second half of financial 2020, which ended on June 30. However, compared to the first half of financial 2020 - the six months from July to December 2019 - it still expects lower organic net sales and margin dilution.

Looking ahead, Diageo said the outlook for the first half of financial 2021 has improved since the year-end, reflecting the good start to the year, particularly for the US business.

Aviva was up 4.0% after Deutsche Bank raised the insurer to Buy from Hold.

At the other end of the large caps, Rolls-Royce Holdings was the worst performer, down 5.8% after the jet engine maker late on Friday said it noted continued media speculation regarding the possibility of undertaking a fundraising, but it said that no final decision had been taken.

In addition, Moody's Investors Service on Friday downgraded Rolls-Royce's corporate family rating, offering a bleak outlook for the jet engine maker's balance sheet, should it not turn to fundraising.

In the FTSE 250, Carnival was the best performer, up 8.7% after Barclays, late Friday, upgraded the cruise line to Overweight from Equal Weight.

At the other end of the midcaps, William Hill was the worst performer, down 13% at 271.02 pence giving back some gains after a stellar rise on Friday, as the UK bookmaker was the object of bid interest from the US. The stock closed up 43% on Friday.

On Monday, US casino operator Caesars Entertainment said it has made a possible cash offer for William Hill, which it said the board of the UK bookmaker would accept.

The owner of Caesars Palace in Las Vegas confirmed it is in advanced discussions concerning a possible cash offer for William Hill, its partner in a US joint venture.

The possible offer of 272 pence per share values William Hill at around GBP2.9 billion and is a 58% premium to William Hill's closing share price on September 1, the last business day before Caesars' first approach to William Hill.

Caesars said it has finalised its due diligence and a further announcement will be made as and when appropriate. It expects that a transaction would close in the second half of 2021.

The Japanese Nikkei 225 index closed up 1.3%. In mainland China, the Shanghai Composite ended down 0.1%, while the Hang Seng index in Hong Kong is up 0.8%.

The pound was quoted at USD1.2775 early Monday, up from USD1.2700 at the London equities close Friday.

The euro was priced at USD1.1635, higher from USD1.1623. Against the yen, the dollar was quoted at JPY105.31, down from JPY105.65.

Brent oil was trading at USD41.65 a barrel Monday morning, lower from USD41.76 late Friday. Gold was quoted at USD1,861.07 an ounce, soft from USD1,863.20.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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