Ocado leads FTSE 100 after strong festive trading period
The FTSE 100 carved out more gains on Wednesday and continued 2022’s short, but convincing, move to the upside.
Among the top gainers were the supermarket who benefited from the release of festive trading data from Kantar that pointed to encouraging Christmas sales from all supermarkets.
“The UK supermarkets may well be toasting a bumper festive season based on the latest figures from market research firm Kantar,” said AJ Bell investment director Russ Mould.
“Many of us were unable or unwilling to go out either because the highly transmissible Omicron variant meant we were isolating due to Covid or were in self-imposed isolation to avoid having our Christmas disrupted.”
“Money that might have been spent on eating out or drinking and socialising in pubs and bars instead looks to have found its way into the cash registers of the likes of Tesco, Sainsbury’s and Morrisons, even if sales retreated slightly on record December 2020 levels. Tesco appears to have been the main winner as it grew its market share.”
“Online operator Ocado was the only grocer to grow its sales year-on-year, likely benefiting from progress on its joint venture with Marks & Spencer.”
“We should find out how this translates into financial performance when the supermarkets start updating the market themselves next week.”
Ocado shares were 5.25% higher at the time of writing shortly after midday in London. Tesco gained 0.7% to trade at 296p whilst Sainsbury’s added 0.79%.
Lloyds was another notable gainer as its broke through the 50p mark for the first time since late November. Barclays and Natwest were also higher on the day.
Uk banks have benefited from a surprise interest rate hike in December by the Bank of England.
Shares with defensive attributes were again among the fallers with Experian, Croda and National Grid among the FTSE 100’s worst performers.
Power Metal Resources releases quarterly business update
Power Metal Resources (LON:POW) has provided shareholders with their quarterly business update that included progress at their Tati project, updates on spin-outs and a £1.05m fundraising in November.
Exploration progress was recorded in the Tati project in Botswana where a drill programme was completed and 10 out of 19 holes were drilled at their Canadian Silver project.
Power Metal Resources also secured an option agreement for Kalahari Key Mineral Exploration Pty Ltd which would see Kavango Resources as POW’s operational partner at the Molopo Farms Complex Project.
Power Metal’s spin-off vehicles also had a busy quarter with Golden Metal Resources acquiring the Pilot Mountain Project whilst preparing for an IPO in London.
Power Metal’s FDR Australia subsidiary company had a number of technical updates from gold/copper targets at the Wallal Project.
Paul Johnson, Chief Executive Officer of Power Metal Resources plc, commented:
“We have chosen a non-conformist path for Power Metal in order to build a company, and investment proposition, quite unlike any other within the London junior resource space.”
“We have opted for scale and diversity, assembling a large portfolio, widely spread across multiple jurisdictions and commodities, with a main focus on district scale opportunities.”
“Our mission, after the first phase of portfolio building, was to create value through proactive exploration and corporate activity. We are doing just that as you will see from the project level detail provided for the most recent quarter below.”
“We currently sit at an important point in the Power Metal life-cycle, coincidentally, at a time when the world is demanding unprecedented quantities of metals for investment security, new infrastructure builds and to power the ongoing green technological revolution. “
“Despite the world’s aspirations, the practical reality is that in recent years we have seen metal supply attrition with a lack of large-scale metal discoveries combined with subdued investment in the exploration and project development space.”
“With such skewed supply/demand fundamentals, sectors can come alive, and we believe 2022 will be an exciting year for the junior mining resource space.”
“The final quarter of 2021 is captured below with a brief assessment by the Company of each project and company within our portfolio. The work completed during the final quarter of 2021 has set up Power Metal well for the coming year.”
Home Entertainment value jumps
The value of Home Entertainment jumped 13.3% to £3.7bn in 2021.
As cinemas reopened and the new James Bond film became the biggest selling title of 2021 selling 1.1m units across disc and digital formats.
“The figures released today show what we at Sony Pictures firmly believe: that despite a challenging period for the industry due to the pandemic, the consumer appetite for Film and TV remains as strong and vital as ever,” said Rob Marsh, who is the Senior Vice President of Sony Pictures Home Entertainment.
Looking forward, Liz Bales, Chief Executive of British Association for Screen Entertainment said: “Throughout this pandemic, entertainment at home was the refuge that many chose to take from an uncertain world, and it became clearer than perhaps ever before: audiences are the life-blood that fuels our industry. Serving audiences the content they love is driving a new, innovative world of Home Entertainment. Last year, faced with challenge, our industry was forced to adapt, but now, because of those changes, 2022 may be the biggest and best year for Home Entertainment ever.’
Glenveagh revenues surge
Glenveagh Properties has posted a rise in revenues to €476m, which is a 64% jump.
Revenues were also up 36% compared to the same period in 2019 and have a total forward order book of around €415m.
Despite the positive trading update, the group warned of labour shortages that would create challenges for the next quarter.
CEO Stephen Garvey said: “Our ongoing investment in supply chain integration positions us well in this regard. Having delivered over 700 units from our timber frame factory in 2021, we will continue to prioritise our off-site manufacturing capability to enable us to innovate how we build the homes of the future.”
Christmas grocery sales remain robust
Shoppers spent £11.7bn over the Christmas period, spending more money on the more premium items over the holidays, according the latest data from Kantar.
In the four weeks to 26 December, shoppers spent £627m on more expensive items, which is 6.8% more than the year previously.
“The appetite to celebrate and splash out that little bit more this year pushed sales of luxury own-brand products up across the board,” said Fraser McKevitt, the head of retail and consumer insight at Kantar, who released the data.
“Tesco’s Finest and Sainsbury’s Taste the Difference are easily the largest premium own-label ranges, but we saw the fastest growth from other ranges such as AsdaExtra Special and Iceland Luxury.”
There was a 31% surge in crisp sales while sparkling and still wines jumped by 22%.
In the four weeks to 26 December, like-for-like grocery price inflation hit 3.5%.
UK individuals fund Christmas shopping spree with credit cards
The latest statistics from the Bank of England showed that UK shoppers choose to use their credit cards to fund Christmas shopping during November, whilst savings dropped.
Data from the Bank of England showed the UK added £900m in credit card in November in the run up to Christmas and early Black Friday sales.
“The nation got a head-start on its Christmas shopping this year, with the combination of Black Friday discounts, and worries about delivery delays and stock shortages all meaning that spending shot up in November. The nation is rapidly forgetting its frugal lockdown ways, with borrowing rising and the amount we’ve stashed away in savings falling, even compared to pre-pandemic levels,” said Laura Suter, head of personal finance at AJ Bell.
“Brits turned to the plastic for their pre-Christmas shopping, with £900m added to credit card debt in November, taking total net borrowing in the month to £1.2bn – the highest level since lockdown eased in July 2020. It’s a stark contrast to November last year, when Brits actually repaid £915m of credit card debt rather than adding to borrowing. It even looks high when compared to the pre-pandemic December peak of £681m being spent on plastic in December 2019.”
The rise is credit card spending came at a time when savings in the UK dropped to pre-pandemic levels.
“The good savings habits many people got into during lockdown also showed signs of dwindling in November, with the amount saved into cash accounts below pre-pandemic levels. In November £4.5bn was saved in banks and building society accounts and another £200m with NS&I – 60% lower than the average of the past 12 months.”
IAG shares fly on Omicron optimism
The IAG share price was the top riser in London’s leading index on Tuesday as fears over the omicron variant diminished and investors picked up the beaten down shares.
“Stocks reliant on international travel are powering ahead, with British Airways owner, International Consolidated Airlines Group rising 7% in early trade. With yet more indications that Omicron, though highly infectious, does not cause such serious illness, a wave of relief is pushing up companies which have been hit by worries about tighter restrictions,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
IAG shares were up over 10% at the time of writing in morning trade on Tuesday.
The rally in the IAG share price came a day after US airline shares soared in the first trading session of 2022 in the US.
The rally in US airlines was sparked by a research note by Citigroup analyst Stephen Trent who said the declines due to the Omicron variant could be ‘unreasonable’.
“Nevertheless, higher vaccination rates and emerging anti-viral treatments are just some of the factors that could make negative, knee-jerk stock price reactions to the emergence of future variants look increasingly unreasonable,” Trent wrote in a research note.
IAG shares rose in a broad rally that saw most sectors gain. 79 of the 100 stocks in the FTSE 100 were higher on Tuesday morning with IAG the FTSE’s top riser.
“The best performing stocks in London were in the travel, leisure and energy sectors. Rolls-Royce, also taking off thanks to its heavy footprint in aircraft engines and spares and repairs, announced some corporate housekeeping with the completion of the sale of its Bergen Engines business,” said AJ Bell investment director Russ Mould.
“The gains for oil firms, airlines and hotel, pub and restaurant operators reflect diminished investor concern about the Omicron variant of Covid-19 amid hopes it is milder, if more transmissible, and therefore may have a limited impact on the economy and won’t require onerous or long-lasting restrictions.”
“This is not a certainty, and there is the possibility the market might change its mind on Omicron again if there are signs the sheer volume of cases threatens to overwhelm countries’ health systems.”