Red Rock Resources swings to £5.2m profit

Safiya Bashir
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Red Rock Resources swings to £5.2m profit

Red Rock Resources shares fell on Thursday after the group shared Final Audited Results for the year ended 30 June 2020.

The group reported a pre-tax profit of £5.2m, which was up from the reported loss of £1.7m in the previous year.

Red Rock said that they had mitigated the impacts of the pandemic and saw a growth in profits and received £419,000 of dividend income from its investments over the year.

“There is much that is uncertain in the world outlook. China has become so big a demand factor for many commodities, iron ore and copper included, that sharp recent price increases have been seen in these commodities. Chinese steel production for the first nine months of the year has run at 6.8% above 2019 levels,” said the group in a statement.

“Demand for copper from China also reflects the recovering economy, at a time when South American production has been interrupted by the effects of the pandemic.”

“Longer term, the forecast for copper demand is for 2% growth p.a., and copper investment to replace consumed reserves has been insufficient in recent years.

“One may also wonder whether, if the world is to be converted to alternative energy and electric cars, the implications for demand for the world’s best conductor have been fully thought through and reflected in projected prices.

“Not only do electric cars contain more copper, but the transmission network necessary to take the electricity to the point of use, substituting for all the petrol tankers in the world, will be far greater than that currently existing. Moreover, alternative power generation technologies require large amounts of copper to mitigate their inherent inefficiencies,” it added in a statement.

Red Rock Resources shares are trading -3.18% at 1.06 (1300GMT).

Countrywide accepts £130m takeover offer

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Countrywide accepts £130m takeover offer

After raising its bid to £130m, Countrywide has accepted the takeover offer from Connells.

Connells has won support from 51.03% of the group’s shareholders. When the deal is completed in the first three months of 2021 it will bring together brands, including Bairstow Eves and King & Chasemore, with Allen & Harris, Bagshaws Residential and many more.

Connells’ initial offer for the group was 250p a share in early November, however, the group raised this to 325p. The offer is far below Countrywide’s £750m valuation when it floated back in March 2013.

Countrywide has £91.9m worth in debts. Connells has said it will introduce job losses when the two head offices are merged.

David Livesey, Connells’ chief executive, commented: “We have the right management team, strategy and investment firepower to work with the talented teams at Countrywide and lead Countrywide into a bright future.”

David Watson, acting chairman of Countrywide, said: “Following a thorough evaluation of options and extensive consultation with the company’s major shareholders, we have been encouraged by their recognition of the need to put in place a sustainable capital structure and a willingness to support the company, which is a great business that has been constrained by too much debt.”

Countrywide shares (LON: CWD) are trading +12.03% at 389.00 (0944GMT).

Aldi will spend extra £3.5bn on UK-made food

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Aldi will spend extra £3.5bn on UK-made food

Aldi has announced plans to spend £3.5bn more on UK-produced food products annually within the next five years.

The discount supermarket’s decision will be a positive step for over 1,000 small businesses. The group has already shared plans to create an additional 4,000 jobs UK jobs.

Aldi has over 900 stores and 36,000 employees.

Chief executive, Giles Hurley, said: “We are expecting significant sales growth in 2021 as we open new stores and bring Aldi to more locations across the UK. With the vast majority of our grocery products now coming from British suppliers, our growth will lead to additional jobs and investment in our UK supply chain.”

The supermarket already sources all of its fresh meat, eggs, milk, butter and cream from UK suppliers.

One of the small businesses that Aldi has a partnership with is Manchester Drinks Company.

Richard Benjamin, a co-owner of Manchester Drinks Company, said: “Our new contract with Aldi is a fantastic opportunity to showcase our flavoured gins and liqueurs to shoppers across the country, and will help to provide stability for our business in an uncertain climate.”

Earlier this year, Aldi introduced a click and collect service.

“The business performance has been very, very solid… but we also recognise customer habits are changing and that we need to evolve our business to meet the new demands and we’re actively doing that,” said Hurley.

“We have a unique model, a set of efficiency principles unrivalled in the market, and that it is my firm belief that we can apply those principles to picking and packing stock in a very efficient way for customers… I’m very excited about it,” he added.

FTSE 100 slides on last day of trading

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FTSE 100 slides on last day of trading

The FTSE 100 is on track for its worst day of the year as it slides 1% at opening.

The blue-chip index dropped 101 points to 6454 points and most stocks are in the red as they enter the New Year.

The top faller today is British Airways owner, IAG, which was down 3%. Also down was Diageo and Johnson Matthey, which were down 2.76% and 2.75% respectively.

The FTSE 250 was down by 1% to 20,508.

The FTSE 100 has lost over 14% of its value in 2020 amid the pandemic. This is, however, much worse than stocks in other countries. Germany’s DAX has gained 3.5% this year whilst Japan’s Nikkei rose 16%, and China’s CSI 300 is up 27% since the start of 2020.

Russ Mould of AJ Bell wrote earlier this month: “The UK was a turgid performer, weighed down by its sector mix and heavy exposure to banks and oils and limited exposure to technology, as well as Brexit and perceptions (fair or unfair) that the pandemic has not been handled that well.

“In fact the UK was the worst performer in the second half of the year when Latin America, the Middle East/Africa and Asia were the best.

“This switch toward emerging markets again hints at investors looking for cyclical growth – value for want of a better turn of phrase – rather than secular growth – or more reliable, almost defensive progress – as well as global export and inflation plays,” he added.

Despite the falling FTSE 100, the pound has risen and is up a third of a cent at $1.366 as the US dollar continues to fall.

Jeffrey Halley, senior market analyst at OANDA, comments: “Even the A-Team’s “Hannibal” Smith would be impressed at how well the financial markets buy everything, sell the US Dollar plan is coming together as the year ends.

“US 10-year yields eased slightly overnight, equities are moving higher, along with precious metals, commodities and energy, and currency markets spent the overnight session clubbing the greenback harder than a harp seal harvest.

“Although the US Dollar has been grinding lower throughout the week, it is interesting that currency markets have waited until the year’s penultimate trading session to press the accelerator.

“Part of that is probably down to the UK approval of the Astra Zeneca/Oxford University Covid-19 for immediate use. The Astra Zeneca vaccine is a potential game-changing accelerator in the Covid-19 battle, being producible rapidly in massive amounts, and storable at room temperatures, instead of environments that mimic the South Pole in the middle of winter.”

The four-day week is “affordable” says thinktank

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The four-day week is “affordable” says thinktank

Think tank Autonomy has released a report that says a four-day week would be affordable for most firms.

The organisation is campaigning for four-day weeks without a loss in pay and has said most of the 50,000 firms it studied would be able to cope with the changes through higher productivity levels or raising prices.

Even in worst-case scenarios, a four-day week with no pay loss would still be affordable once this phase of the pandemic has passed.

Will Stronge is the director of research at Autonomy. He said: “For the large majority of firms, reducing working hours is an entirely realistic goal for the near future. By providing a hypothetical ‘stress test’, we can dispel any myths about the affordability of a four-day working week.

“Any policy push will have to be carefully designed, and different strategies would need to be deployed for different industries. However, what is remarkable is that if it happened overnight, with no planning, most firms would still remain profitable.

“The four-day week is picking up momentum across the world post-Covid-19 and we’re calling on the government to begin investigating the best options for rolling it out.”

Labour MP for Bootle and former shadow chief secretary to the Treasury, Peter Dowd, supports the research and said the government should consider rolling out a shorter working week.

“If the government is serious about levelling up this country then they should consider the four-day week as it represents one of the best opportunities for sharing work more equally across the economy.

“I’m in favour of the four-day week being introduced as all the evidence shows it would boost wellbeing, improve productivity and give British workers a much better work-life balance.”

AstraZeneca shares rise as vaccine is approved

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AstraZeneca shares rise as vaccine is approved

AstraZeneca shares (LON: AZN) jumped on the news that the vaccine developed with the University of Oxford has been approved for use.

Shares in AstraZeneca were up 4% at 7,507.97 on Tuesday and are currently up almost 1% at 7,526.84 (1024GMT).

First doses of the vaccine will be given as soon as Monday 4th. The UK has ordered 100 million doses.

The news comes as 53,135 new Covid cases were recorded in the UK this week and millions of more people are expected to placed in Tier 4 restrictions.

“The vaccine is our way out of this,” Matt Hancock told the BBC. “Whereas previously I’ve I hoped we’d be out of this by spring, I now have a high degree of confidence we’ll be out of this by spring.”

A Department of Health and Social Care spokesperson said: “The priority should be to give as many people in at-risk groups their first dose, rather than providing the required two doses in as short a time as possible.

“Everyone will still receive their second dose and this will be within 12 weeks of their first. The second dose completes the course and is important for longer term protection.”

Analysts from AJ Bell commented on what the rollout of the vaccine would mean for markets, saying: “Buoyed by news of mass inoculation on the UK and other countries, as well as ongoing fiscal and monetary support for economies from governments and central banks, markets seem to be leaning toward this scenario right now, with some investors openly debating the return of inflation.”

Nationwide: House prices hit six-year high

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Nationwide: House prices hit six-year high

According to the Nationwide House Price Index, house prices in 2020 grew at the fastest rate in six years.

In December alone, the average price of a home increased by 0.8% and now costs £230,920 in the UK and £486,562 in London.

Whilst the first lockdown stalled the housing market as viewings were banned, the market boomed this year as Rishi Sunak introduced the stamp duty holiday.

Robert Gardner, the Nationwide Chief Economist said: “Housing market conditions have remained robust in recent months, even as the wider economic recovery lost momentum and the UK economy faced the prospect of further lockdowns and continued uncertainty about the UK’s future international trading relationships.”

“The furlough and Self Employment Income Support schemes provided vital support for the labour market, while a host of measures helped to keep down the cost of borrowing and keep the supply of credit flowing.”

As people want more space and are rushing to complete deals before the end of the stamp duty holiday, Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the rush will continue for some time yet.

“There are several tailwinds and the housing market is making the most of them. Competitive mortgage rates show no sign of disappearing anytime soon, with lenders most notably returning to the 90% loan-to-value space, providing a further boost for first-time buyers,” he said.

The Nationwide chief economist, however, says that the outlook is uncertain.

“Much will depend on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy,” he said.

Following the stamp duty holiday, prices are likely to cool off but may again gain traction as people continue to work remotely and want more space.

“After a strong first quarter of 2021, prices are likely to cool in the wake of the Stamp Duty deadline but could then start to increase again towards the end of the year,” said George Franks, co-founder of Radstock Property.

Bitcoin surges to record high as US dollar slides

Safiya Bashir
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Bitcoin surges to record high as US dollar slides

Bitcoin has surged to a record high, surpassing $28,500.

The cryptocurrency has gained over 5% today and 46% since the start of the month. The increase in Bitcoin comes as the US dollar slides to its lowest level since April 2018.

Jeffrey Halley of OANDA commented: “It is clear that currency markets are pricing in a potentially powerful move lower by the US Dollar as soon as the new trading year begins next week. I agree with the overall view but not that the unidirectional move in the US Dollar lower this week, suggests that positioning is heavily one-way.

“Markets face a heavy data week next week, and a significant risk event in the shape of the Georgia Senate runoff elections.”

Meanwhile, gold has remained flat at $1,878 per ounce.

Brad Bechtel of Jefferies said: “Gold continues to languish around $1,875 and although that is still the market’s preferred store of value, the ancient relic is indeed looking a little behind the times.

“Will be interesting to watch these two assets duke it out in the new year with each fighting for dominance as the alternative store of wealth for the rapid fiat currency debasement going on in the financial system.”

In 2020, performed ten times better than gold. Simon Peters, an analyst at the online investment platform eToro said on Bitcoins surge: “Demand continues to outstrip supply and institutional investors continue to seek exposure to bitcoin hedge against inflation, both of which have helped to keep the price above $20,000.

“Investors are recognising that, despite the rapid price rise grabbing headlines recently, bitcoin’s real potential remains as a long-term investment to be held for months if not years.”

However, the Biden administration has said that they will introduce regulations that could restrict bitcoin’s growth.

Jesse Cohen, a senior analyst at Investing.com, explains: “While many expect the bitcoin rally to continue in 2021, I’m more concerned with what the Biden administration could mean for crypto.

“Incoming Treasury Secretary Janet Yellen has previously warned investors about bitcoin during her time as Fed Chair, calling it a highly speculative asset and not a stable store of value.

“I expect bitcoin to remain highly volatile to the downside in the new year, given the potential for more scrutiny and tighter regulation. That should see prices fall back from their record highs,” added Cohen.

China & EU on the brink of a trade deal

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China & EU on the brink of a trade deal

According to reports, the EU and China are on a brink of agreeing to a trade and investment pact.

The agreement will give EU firms improved access to the Chinese market. The deal comes soon after the UK’s post-Brexit trade agreement.

An unnamed EU official told Reuters: “The talks are about to be concluded. It’s looking good. There are only some minor details left which need to be hammered out. “As things stand now, the political agreement between the EU and China will be sealed on Wednesday.”

“We get much better market access and the protection of our investments in China. Better market access is something we have been working for for many years, and the Chinese have made quite a big step towards us.”

The talks started in 2014 but have not made progress over the claims that China was not coming through on promises to lift curbs on EU investment.

The European Commission said there has been progress made on the talks with Beijing, including the core issue of workers’ rights. This is particularly important amid the reports that China is detaining Uighur Muslims in the Xinjiang province and using as forced labour. This has been denied by Beijing.

Wang Wenbin, a Chinese foreign ministry spokesman said on Tuesday that talks had made progress and that a deal can be confirmed “at an early date”.

The deal between the EU and China will have to be ratified and this process is unlikely to take place before the second half of 2021.

The Hut Group shares rise on continued expansion

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The Hut Group shares rise on continued expansion

The Hut Group has spent over £300m on acquisitions as it continues expansion plans.

The group bought US online skincare retailer Dermstore in a £259m deal as well as Claremont Ingredients and David Berryman for £59.5m.

The Hut Group floated shares on the stock exchange in September and was valued at £6.8bn on Christmas Eve.

Matthew Moulding, the chief executive, said: “A key driver behind the decision to list THG on the London Stock Exchange just over three months ago was to enable the group to make major global investments, such as Dermstore.com.

“Accessing capital through a London listing has enabled us to accelerate our growth plans and build out a global leadership position within the exciting beauty industry.”

In October, the group posted a +38.6% year-on-year revenue growth for Q3 with a +51.3%, year-on-year growth in online revenues to £320.2m. The Hut Group raised full-year 2020 revenue guidance to between £1.48bn and £1.52bn.

Moulding said: “I am pleased to report a strong period of trading in our first quarterly update as a public company, including an upgrade to revenue growth guidance for 2020. I would like to thank all our colleagues for their huge contribution to date. Our strong organic revenue growth across all divisions, numerous THG Ingenuity partnership deals, and the recent acquisition of luxury skincare brand Perricone MD, demonstrates our strategic direction and progress in the period.

“Our decision to list on the London Stock Exchange provides us with a strong platform to raise the profile of both Ingenuity and our Brands, and further supports their strong organic growth. Our acquisition strategy remains unchanged, with a focus to complement organic growth with brand IP and Ingenuity infrastructure additions.”

The Hut Group shares are trading +5.29% at 737.00 (1149GMT).

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