FTSE 100 makes slow start despite vaccine news

Safiya Bashir
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FTSE 100 makes slow start despite vaccine news

The FTSE 100 had a subdued start to the day despite news that the UK had approved the Pfizer/Biontech coronavirus vaccine.

The blue-chip index opened in the red and after an hour was up 0.1%. Analysts have said that it is likely that because the pound is down 0.4% against the dollar and 0.5% against the euro, following the reported tension within the EU and the ending of the transition period.

Despite the slower morning on the FTSE 100, yesterday it surged 2% as it continues November’s rally.

“The lack of market reaction suggests that this decision was probably widely expected at some point, and perhaps the real challenge now lies in the production, as well as the speed of any rollout of the two jab treatment,” said Michael Hewson from CMC Markets.

“Ultimately even if a vaccination program was to start this month, the fact that two jabs are required means that it’s likely to be several months before we start to see a possible economic benefit in terms of an easing of restrictions.”

Meanwhile, in Europe the DAX was down 0.7%, while the CAC saw a 0.4% drop.

In the US, main markets hit new record highs after there was news that talks over a new stimulus package were continuing.

Connor Campbell from SpreadEx said: “Failing to close above 30,000 yesterday evening, instead finishing at 29,823, the Dow Jones is set to retreat this afternoon, the futures pencilling in a 130 point fall. It may take FDA approval of the Pfizer and Moderna vaccines to get the Dow to spend more than a few hours at a time the right side of 30,000.”

Commenting on what the vaccine rollout in the UK means, he add: “It’s another step closer to pre-pandemic normality, and though there are still, minimum, months of lockdown measures left, and a war’s worth of economic damage to undo over the next few years, the markets are firmly focused on the long-term.”

Only 12% of UK investors think they would benefit from negative interest rates

Jamie Gordon
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Only 12% of UK investors think they would benefit from negative interest rates

Speaking earlier in the year, Governor of the Bank of England, Andrew bailey, said that he wouldn’t take negative interest rates off the table, if lenders and consumers required extra incentive to loosen their strings during the COVID downturn recovery. Interestingly, though, research conducted by FJP Investment indicates that half of UK investors are concerned about the prospect of such a measure being introduced.

The investment firm reports its findings from an independent, commissioned survey of more than 1,000 UK-based investors – all of whom had savings and investments in excess of £10,000, excluding their pension and primary residence.

The data showed that some 49% of those asked believe that the introduction of negative interest rates would harm their investments, while only 12% believe they would benefit from such a scenario.
 
Further, some 40% said they would restructure their portfolio in response to a negative interest rates announcement, while just 14% said they’d feel confident leaving their investment portfolio as it is. The remaining portion – 46% – said they were unsure how they would manage the change.

Commenting on the data, FJP Investment CEO, Jamie Johnson, said: “Investors are clearly worried about the impact negative interest rates could have on their portfolios. While the Bank of England is yet to play this card, there remains a great deal of speculation that negative rates could be around the corner.”

With the Bank of England announcing last Thursday that it would retain its 0.10% interest rate until the new year, speculation remains about a shift to negative rates in 2021, if economic sentiment and productivity do not improve at the desired rate.
 
“If COVID-19 cases cannot be brought under control and strict lockdown measures remain, the recovery of the UK economy is going to be significantly hindered. In such a situation, we could expect negative interest rates to come into play sooner rather than later. In any case, investors must start preparing now to avoid any negative repercussions on their portfolios”, Mr Johnson added.

In general, negative interest rates would offer downside for cautious savers, and potential upside for active enterprises, such as VCs and startups. In an effort to encourage people to spend the economy out of a slumber, negative rates would reward borrowing and penalise capital conservation. As stated by IW Capital CEO, Luke Davis, following earlier speculation:

“A policy maker at the Bank of England has defended the potential use of negative interest rates, calling results from other countries ‘encouraging’. The move could effectively mean that savers pay to have their money with banks and are incentivised to borrow money and increase their spending.”

Michael Gove rules out “vaccine passports”

Safiya Bashir
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Michael Gove rules out “vaccine passports”

Michael Gove has confirmed that Britons will not be requiring a ‘vaccine passports’ to visit the pub, theatre or sport stadium.

Speaking on Sky News, the senior minister confirmed that there would be no introduction of identification for those who have received the vaccine.

“I certainly am not planning to introduce any vaccine passports, and I don’t know anyone else in government who is,” he said.

“I think the most important thing to do is make sure we vaccinate as many people as possible.

“There are three vaccines that are going through appropriate testing now to make sure that they’re absolutely safe and the most important thing is to make sure we get as many people as possible – starting with the most vulnerable, and then those who work on the front-line of the NHS – vaccinated effectively,” Gove added. “That’s a big challenge because we’ve got to persuade people who are opposed to taking a vaccine that it’s in all of our collective interest”.

“I think we can take on some of the arguments from the anti-vax brigade, they’re not really based in science. There’s a very rigorous process we undergo to make sure vaccines are safe.”

Gove’s comments came following the appointment of Nadhim Zahawi who will be responsible to the rollout of the jab. Zahawi made comments to suggest that people in the UK who had refused the vaccine could be refused entry to pubs.

“We are looking at the technology. And, of course, a way of people being able to inform their GP that they have been vaccinated,” Zahawi told the BBC over the weekend. “But, also, I think you’ll probably find that restaurants and bars and cinemas and other venues, sports venues, will probably also use that system – as they have done with the [test and trace] app.”

“I think that in many ways the pressure will come from both ways. From service providers who’ll say: ‘Look, demonstrate to us that you have been vaccinated.’ But, also, we will make the technology as easy and accessible as possible.”

Lastminute.com to pay £7m in refunds

Safiya Bashir
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0
Lastminute.com to pay £7m in refunds

Lastminute.com has agreed to pay over £7m in refunds following pressure from the Competition and Markets Authority (CMA).

The watchdog ensured the holiday firm should refund over 9,000 customers after holidays were cancelled due to the Coronavirus pandemic.

Following CMA intervention, the group has now signed formal commitments to pay these refunds as soon as possible.

Andrea Coscelli, chief executive of the CMA, said: “Online travel agents have a legal responsibility to provide prompt refunds to customers whose holidays have been cancelled due to coronavirus – irrespective of whether the agent received refunds from airlines and accommodation providers.”

“Our action today means that customers whose holidays were cancelled by Lastminute.com will receive their money back without undue delay.”

“The CMA is continuing to investigate package holiday firms following concerns that people are not getting the refunds they’re entitled to when bookings can’t go ahead because of the pandemic. If we find that businesses are breaching consumer protection law, we will not hesitate to take further action.”

Half of the customers who are owed a refund will be paid by 16 December, with the rest receiving refunds by the end of January.

It’s not only Lastminute.com who has been chased by the regulator. The CMA is chasing over 100 package holiday firms to ensure refunds are paid to customers who have seen their holidays cancelled.

The CMA received confirmation from Virgin Holidays in October that the group would refund all customers “without undue delay” following many complaints.

Polymetal shares climb on Russian joint venture

Jamie Gordon
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Polymetal shares climb on Russian joint venture

Pecious metals mining company, Polymetal (LON:POLY), watched its shares rally on Tuesday following its announcement that it had entered a new joint venture.

The deal sees the company invest an initial $0.5 million in exchange for a junior holding in the exploration licence, and a 35% stake in the mining of the Pekinskaya area, Taimyr Peninsula, Russia.

Polymetal says the project adjoins the existing joint venture site, and it has the option to acquire a 70% interest in Pekinskaya, in exchange for funding $2.3 million in cash of three stages of exploration expenditures.

The first stage is a $0.5 million investment for an initial 35% stake in the joint venture. Stage two increases the stake to 63%, in exchange for $1.1 million in newly issued share capital, by March 2021. Step three increases the stake to 70% for $0.6 million in newly issued share capital, by March 2022.

Polymetal added that it may provide loans to the joint venture, to fund extra exploration costs at stages two and three, and finance three additional field seasons post 2022. The company continued, saying it has been granted a call option exercisable between 2023 and 2026, to acquire the remaining interest in the joint venture.

Speaking on the joint venture, Group CEO, Vitaly Nesis, commented:”Through this new joint venture Polymetal has expanded its footprint in the highly prospective Taimyr region with the potential to discover a significant copper-gold porphyry mineralisation”

“We continue to be committed to further development of our exploration portfolio through partnerships with juniors in the regions of our presence”.

Following the update, Polymetal shares rallied by 4.80%, to 1,637.00p apiece. This current price is below its post-pandemic high of 2,050p, as well as analysts’ consensus target of 1,719p.

Analysts currently have a consensus ‘Buy’ stance on the stock, while the Marketbeat community gives it a 64.08% ‘underperform’ rating. The company has a p/e ratio of 11.00 and a dividend yield of 3.92%.

The future of vertical indoor farming with Vertically Urban

UK Investor Magazine
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The future of vertical indoor farming with Vertically Urban

We are joined by Vertically Urban CEO Andrew Littler to discuss the emerging market of vertical indoor farming. The market was estimated to be worth £1.7bn in 2018 and is estimated to grow to £10bn by 2026 as demand for sustainable farming solutions increases alongside the need to feed a growing population.

Vertically Urban are currently raising funds on Seedrs to provide the capital to deliver on a £30m business pipeline by hiring key staff, boosting technology capabilities and driving marketing.

Find out more about Vertically Urban and their Seedrs fundraise here

Gooch & Housego shares rise despite drop in profits

Safiya Bashir
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0
Gooch & Housego shares rise despite drop in profits

Gooch & Housego shares (LON: GHH) surged almost 7% on Tuesday’s opening.

The optical components and systems manufacturer demand for its products and capabilities had remained “robust” and it was set for a stronger second half.

Despite this, the group reported a 30% decline in profit due to disruption at manufacturing sites amid the pandemic. Pre-tax profit was down 35% year-on-year to £9.8m whilst revenue fell 5.5% to £122.1m.

Gooch & Housego said in the update that they would scrap the total dividend for the year.

The year-end order book is 0.8% higher than the same time last year at £92.4m and the group said it is on track to reach previously targeted profits.

Mark Webster, chief executive of the group, commented: “Our priority during the ongoing COVID-19 pandemic remains the health and safety of our staff, customers and suppliers. We are very proud of the way our staff have responded to this unprecedented challenge.

“FY2020 profits were affected by temporary disruption to manufacturing and lower demand in some subsectors due to the COVID-19 pandemic. We have continued to invest in our high priority R&D targets, been able to maintain a strong balance sheet and have improved our liquidity levels.

“Our order book is robust and there remains considerable long term potential for our photonic technologies and system capabilities in all of our target sectors.

“The challenge of the pandemic has validated our long term strategic goals of diversification and moving up the value chain. We intend to vigorously pursue these goals through internal investment and where appropriate, acquisitions.”

Gooch & Housego shares (LON: GHH) are currently trading +5.55% at 1.213,80 (1128GMT).

Debenhams faces collapse as JD Sports pulls out of takeover talks

Safiya Bashir
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1
Debenhams faces collapse as JD Sports pulls out of takeover talks

Debenhams is on the brink of collapse after JD Sports pulled out of takeover talks.

Following the collapse of Arcadia, JD Sports left rescue talks of the department store chain.

Thousands of jobs are at risk after Debenhams collapsed into administration for the second time in April.

In a statement to the City, JD Sports said: “JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated.”

If a buyer is not found, the department store could go into liquidation.

Debenhams employs 12,000 staff at 128 UK stores – many of which remain closed amid the pandemic. The retailer has already cut about 6,500 jobs since May.

Former Debenhams chairman Sir Ian Cheshire said that the group was “caught in a straitjacket” as too many stores are let on long leases.

Arcadia collapsed this week and became the biggest casualty of the pandemic.

Arcadia chairman Ian Grabiner, said: “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders.”

“Throughout this immensely challenging time our priority has been to protect jobs and preserve the financial stability of the group in the hope that we could ride out the pandemic and come out fighting on the other side.

“Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”

Sosander posts 52% rise in revenue

Safiya Bashir
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0
Sosander posts 52% rise in revenue

Sosander shares (LON: SOS) opened 2.53% lower on Tuesday morning after the group released its half-year trading update.

For the six months ended 30 September, revenue surged 52% from £2.81m to £4.28m whilst gross profit grew by 48% to £2.24m.

Monthly sales for September to November increased by 115% compared to the average for the prior five months and the retailer said return rates dropped by 7%.

Ali Hall and Julie Lavington, Co-CEOs commented: “We are delighted to be reporting strong revenue growth and a significant improvement in EBITDA despite one of the most challenging periods ever for the retail industry. It is a real achievement and testament to the fantastic team we have built at Sosandar, that we have delivered increased sales, better cost efficiency, better engagement with customers, grown our database and quickly expanded our product range, whilst at the same time significantly reducing marketing spend.

“From September onwards, we cautiously increased expenditure on new customer acquisition and trading has quickly gained momentum. We are very pleased to be exceeding the record highs seen last autumn on half the marketing spend.

“As one would expect, we are now selling a much wider range of casual and at-home product than before. However, the Sosandar customer has also not lost a taste for glamour, with sales of sequins, leather, fur coats and knee boots remaining strong.

“Looking ahead, whilst there remain short term uncertainties due to Covid-19, our long-term focus has not wavered and continues to be on the development of our product, infrastructure and service, alongside most importantly, further building our customer base. The scale of our opportunity is substantial and we are well placed to deliver on our ambition for Sosandar to be a long-term, sustainable success.”

Sosander shares (LON: SOS) are currently trading -5.82% at 18,60 (0903GMT).

House prices continue to surge in November

Safiya Bashir
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0
House prices continue to surge in November

In November UK house prices increased at the fastest rate since 2015.

Figures from Nationwide showed that house prices in last month surged 6.5% average house price in the UK increased from £227,826 to £229,721.

The housing market remained strong over the second lockdown and increased by a 5.8% growth in October.

Thanks to the pent-up demand from the first lockdown and the stamp-duty holiday, the housing market has boomed this year.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “Housing market activity has remained robust. October saw property transactions rise to 105,600, the highest level since 2016.”

“The outlook remains highly uncertain and will depend heavily 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. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.”  

“Housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”  

Estate agent Jeremy Leaf said: ‘These figures feel like the storm before the calm as buyers and sellers rushed to take advantage of the stamp duty holiday before the March deadline, despite continuing Covid restrictions in October, the possibility of a no-deal Brexit and economic growth stalling. 

‘That frenzy has been since replaced by a quieter, but just as determined mood to complete sales previously agreed. We don’t see any signs either of significant price adjustments, irrespective of whether there is an extension to the stamp duty holiday, with activity continuing to be supported by a shortage of listings and longer-term low-interest rates.’

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