LONDON MARKET OPEN: European Equities Slip Amid Inflation Fears

(Alliance News) - Stock prices in Europe started the new week on a low ebb with sentiment damped ...

Alliance News 22 February, 2021 | 8:47AM
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(Alliance News) - Stock prices in Europe started the new week on a low ebb with sentiment damped by concerns that an acceleration in inflation could spell an end to stimulus measures.

In the UK, focus will be on Prime Minister Boris Johnson, who is set to present a roadmap to exit lockdown in England.

The flagship FTSE 100 index was down 51.02 points, or 0.8%, at 6,573.00 early Monday. The domestic-focused FTSE 250 index was down 212.49 points, or 1.0%, at 20,823.47, and the AIM All-Share index was down 7.34 points, or 0.6%, at 1,206.84.

The Cboe UK 100 index was down 1.3% at 652.33 points. The Cboe 250 was down 1.1% at 18,388.39, but the Cboe Small Companies was marginally higher at 12,801.41.

The CAC 40 index in Paris was down 0.8% and Frankfurt's DAX 30 was 0.9% lower.

"It's one of these days where investors don't know what to do with the good news. Asian markets kicked off the week on a flat-to-negative note despite the most-expected news that the immunization with Pfizer and BioNTech's Covid vaccines do curtail the transmission of the coronavirus. In other words, it means that the Covid vaccines will actually be the game changer in 2021," Swissquote analyst Ipek Oykardeskaya commented.

"But it also means that the huge monetary and fiscal stimulus will be harder to justify, and companies will need to fly with their own wings. The major worry is that the rising inflation worries could accelerate the end of the stimulus game."

In London, miner and commodities broker Glencore was among the better-performing large-caps stocks, up 1.2%. JPMorgan raised Glencore to Overweight from Neutral.

International Consolidated Airlines Group climbed 0.4% as the British Airways parent announced the UK flag carrier has secured two finance-support pacts worth GBP2.45 billion in total.

BA has secured a GBP2.0 billion UK Export Development Guarantee of GBP2.0 billion. The term-loan is for five years. British Airways also agreed a deferral of GBP450 million in pension deficit contributions that were due from October last year to September this year.

Among mid-caps, Mitchells & Butlers fell 1.3% as it noted a sharp fall in sales in recent months and launched an open offer to bolster the pub operator's finances.

Mitchells & Butlers announced a GBP351 million open offer of shares to bolster its balance sheet as its "liquidity position has deteriorated significantly as a result of the impact of the Covid-19 pandemic".

The All Bar One owner said the extra cash will go towards reducing its unsecured debt. It also will support its secured debt financing.

Since the end of December, none of M&B's sites have been open. In the period between, September 27 and January 16, total managed sales were 70% lower annually.

Pubs, airlines and the wider travel & leisure industry will be in focus Monday as UK PM Johnson outlines how the Covid-19 curbs will be eased, paving the way for the first easing of restrictions since England's third national lockdown was announced on January 4.

All pupils in all years can go back to the classroom from March 8, with outdoor after-school sports and activities allowed to restart as well, Johnson is expected to say.

Socialising in parks and public spaces with one other person also will be permitted in a fortnight when the rules are relaxed to allow people to sit down for a drink or picnic.

However, Number 10 insisted that the "stay at home" message would remain in place despite the relaxation of some restrictions.

Sterling slipped below the USD1.40 mark as the dollar was higher across the board early Monday. The pound was quoted at USD1.3996, down slightly from USD1.4020 at the London equities close Friday.

The euro also lost ground on the dollar over the weekend. The euro stood at USD1.2104 early Monday, down from USD1.2139 at the European equities close Friday. Against the yen, the dollar was trading at JPY105.79, improved from JPY105.53.

Back in London, fund supermarket Hargreaves Lansdown and trading platform AJ Bell were down 0.9% and 1.9%, respectively.

AJ Bell, Hargreaves Lansdown, and Interactive Investor have all written to the UK Treasury complaining about their exclusion from a majority of initial public offerings.

The heads of the three companies wrote to City minister John Glen last week asking that he consider forcing companies to consider retail offers in new flotations as well as the opening of a wider consultation.

The letter noted that smaller investors has been unable to buy into the recent IPOs from online personalised cards and gifts retailer Moonpig Group, as well as shoe maker Dr Martens and Hut Group owner THG.

In all three cases, share prices for the companies rose to an instant premium to the IPO price, forcing private investors to pay more hefty amounts for shares.

"As it stands, retail shareholder rights are almost completely ignored when it comes to the vast majority of IPOs, which largely take place between City institutions behind closed doors," the letter said.

Elsewhere in London, G4S shed 9.7% and was trading at 243.00 pence per share.

Security company GardaWorld "stands firm" and its 235p per share offer for G4S is final. GardaWorld said early Monday the offer will not be revised.

"There can be no better owner for G4S than GardaWorld, but we are disciplined buyers and we will not overpay for a company with systemic ESG issues that continue to come to light," GardaWorld Chief Executive Stephan Cretier said.

The 235p offer values G4S at GBP3.68 billion.

Earlier in February, London's Takeover Panel stepped in to put in place an auction procedure to resolve an ongoing takeover saga.

Last month, G4S agreed to be taken over by Allied Universal in a GBP3.8 billion deal, but the 245p cash offer has been extended and remains open for acceptances until March 6.

On the AIM market, Avacta rose 15% as it noted press speculation about UK government take-up of its lateral flow SARS-CoV-2 rapid antigen test.

"The company is now progressing to a full clinical validation with a larger number of patient samples in order to obtain a CE mark for the test for professional use, aiming to bring the test to market in Europe around the end of the first quarter of this year," Avacta said.

The biotechnology company added that press reports which stated a saliva-based rapid antigen test is being developed at its Porton Down facility in Wiltshire are incorrect.

Avacta added: "In fact, the evaluated test was the anterior nasal swab test that has subsequently generated the excellent initial clinical performance data.

"We believe an accurate, rapid antigen test, that has been appropriately validated, will help to limit the spread of the coronavirus and support the safe return to work and play. In the UK, the Department of Health & Social Care is a potential customer and partner in the roll out of such a validated test."

Brent oil was quoted at USD63.34 a barrel, down slightly from USD63.47 at the London equities close Friday. Safe-haven gold was quoted at USD1,791.44 an ounce, up from USD1,786.45.

By Eric Cunha; ericcunha@alliancenews.com;

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
AJ Bell PLC 422.50 GBX -4.20 -
Hargreaves Lansdown PLC 1,510.50 GBX -2.04 -
G4S PLC 242.80 GBX 0.00
Avacta Group PLC 195.00 GBX 1.04 -
Glencore PLC 290.70 GBX -4.69
Mitchells & Butlers PLC 304.00 GBX -1.30 -
International Consolidated Airlines Group SA 191.95 GBX 3.06

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