FTSE 100 receives boost from UK GDP figures

Liam Roche
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FTSE 100 receives boost from UK GDP figures

The FTSE 100 received an early helping hand thanks to a better than forecast Q1 GDP reading, showing the UK contracted by 1.5% in the lockdown-hit opening months to the year, compared to the -1.6% forecast.

“A stronger sign of recovery was news that the economy actually grew by 2.1% in March, instead of the 1.5% expected, as the country cautiously started to open up. That’ll only boost hopes of a robust rebound in the second and third quarters,” said Connor Campbell, financial analyst at Spreadex.

The GDP news shot the FTSE 100 to the top of the table after the bell, leaving the UK index 0.46% higher and around 20 points short of 7,000.

The DAX, meanwhile, added 0.4%, lurking just below 15,150, with the CAC up 0.3%, sticking a pinkie beyond 6,260.

“These European gains should be caveated, however, as they all come before this afternoon’s US inflation reading for April has been unveiled. And given that Monday and Tuesday’s losses can in large part be explained by fears of surging inflationary pressures, the trading landscape could look very different once the figure has been released,” Campbell said.

FTSE 100 Top Movers

Spirex-Sarco Engineering (3.07%), Diageo (3.05%) and Glencore (2.74%) are the top three risers on the FTSE 100 90 minutes into the morning session on Wednesday.

At the other end, Just Eat (-3.92%), Flutter Entertainment (-1.95%) and Renishaw (-1.07%) lost the most ground.

UK GDP figures

The UK economy grew by 2.1% in March, at better than expected levels, in what was the fastest month of growth since last August. 

The Office for National Statistics (ONS) said on Wednesday that economists previously predicted growth of 1.3%. 

The UK economy also showed resilience during the second wave of the pandemic, as it contracted by 1.5% during Q1 of 2021, seeing strong growth in March. Again, expectations were surpassed, as a contraction of 1.7% was initially forecast.

During Q1 the economy was supported by government spending, as the government increased spending on vaccinations and testing, while consumer spending and business investment dropped as the third lockdown came into effect.

Diageo

The Diageo share price jumped during the morning session on Wednesday, up by 3.8% at the time of writing, as the drinks company made a pledge to buy back shares or provide a special dividend.

The FTSE 100 company’s share price reached 3,317p per share, now less than 10% below its all-time-high of 3,640p, as it looks to be closing in on the marker last reached in September 2019.

UK GDP figures show resilience as economy looks set for speedy recovery

Liam Roche
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UK GDP figures show resilience as economy looks set for speedy recovery

UK GDP exceeds expectations for March

The UK economy grew by 2.1% in March, at better than expected levels, in what was the fastest month of growth since last August.

The Office for National Statistics (ONS) said on Wednesday that economists previously predicted growth of 1.3%.

The UK economy also showed resilience during the second wave of the pandemic, as it contracted by 1.5% during Q1 of 2021, seeing strong growth in March. Again, expectations were surpassed, as a contraction of 1.7% was initially forecast.

During Q1 the economy was supported by government spending, as the government increased spending on vaccinations and testing, while consumer spending and business investment dropped as the third lockdown came into effect.

The Bank of England stated a week ago that it expects the UK economy would recover quickly as coronavirus restrictions are lifted to grow by 7.25% in 2021 as a whole.

“Despite a difficult start to this year, economic growth in March is a promising sign of things to come,” UK chancellor Rishi Sunak said.

“As we cautiously reopen the economy, I will continue to take all the steps necessary to support our recovery.”

Commenting on UK GDP rising 2.1% in March, Ian Warwick, Managing Partner at Deepbridge Capital, said: “Today’s monthly GDP estimate reveals the fastest monthly growth since August 2020 and is further evidence that the economy is moving in the right direction at a significant pace.”

“As we focus on economic recovery, it remains critically important that scale-up businesses, particularly in high-growth sectors such as digital technologies and life sciences are supported; as they will be at the very heart of economic growth as we create an economy fit for the twenty-first century.”

“Government initiatives such as the Enterprise Investment Scheme (EIS) have never been more important for helping entrepreneurs and innovators source the funding they require, whilst also offering private investors with tax incentives to develop UK-supporting private equity portfolios. With our EIS funds reaching record levels of funding in 2020/21 it is evident that there is considerable demand from investors and financial advisers alike to invest in early-stage UK companies which we believe will be at the forefront of our economic recovery.”

Tui optimistic despite heavy losses as bookings fly in

Liam Roche
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Tui optimistic despite heavy losses as bookings fly in

Tui has reported a loss of €1.3bn

Tui (LON:TUI), one of Europe’s largest holidaymakers, confirmed that it has seen an influx of bookings as the company revealed it has sold 2.6m packages ahead of the summer.

The travel giant also confirmed that its prices were up by 22% compared to 2019%.

During H1 of the current financial year, Tui has reported a loss of €1.3bn, for the period from October 2020 to March 2021. As borders were closed and the prospect of summer holidays were doubtful, the travel company took €700m in sales, down from €6.6bn over the same period the year before.

Many future flyers were willing to hold on til the summer of 2022, using vouchers to secure dates when fewer restrictions will apply. Since March new bookings for summer 2022 have increased by 109%.

“The prospects for early summer 2021 make me optimistic for tourism and for Tui. They are significantly better than in the first pandemic year, 2020,” said Fritz Joussen, Tui’s chief executive.

Coronavirus tests for holiday goers could be as low as £20 under plans revealed today that are designed to encourage bookings. 

Tui, the UK-based tour operator, said it would cut the price of PCR tests by more than 50% as concerns were raised over the cost of tests stopping people from booking vacations abroad. 

The company will manufacture a number of packages to be distributed to passengers as of Monday, including one for £20 for people returning to the UK from “green” listed countries.

New AIM admission: Glantus Holdings

Andrew Hore
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New AIM admission: Glantus Holdings

Accounting software firm Glantus believes that its accounts payable analytics technology could become highly significant as companies look to invest in automation to make their cash generation more efficient. The accounts payable automation market is expected to grow at around 10% a year and it could be worth €3.3bn in 2027.
Management is experienced in the technology sector and the company has built up its own IP. Growth will come from cross-selling products to existing customers and securing new, large customers.
Existing shareholders raised £3.8m after expenses. The company receives £8.7m a...

Lockdowns do not halt growth at Angling Direct

Andrew Hore
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Lockdowns do not halt growth at Angling Direct

Fishing tackle retailer Angling Direct (LON: ANG) has coped with the past year relatively well. Call and collect helped to bolster store sales and online demand soared.
In the year to January 2021, retail store sales were 15% higher at £32.3m, although that does include newly opened stores. Online sales were two-fifths higher at £35.3m, taking over as the larger generator of revenues. Overall revenues were 27% higher at £67.6m.
Angling Direct moved back into profit helped by improved gross margins. Pre-tax profit was £2.6m and there was £6.9m of cash generated from operations. However, it shou...

Cineworld share price falls amid clashes with major shareholder

Liam Roche
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Cineworld share price falls amid clashes with major shareholder

After a positive opening to the week for the Cineworld share price (LON:CINE), it dropped by 4.11% on Tuesday, down to 92.34p. It has lost a lot of ground from its highest point of the year of 122p, its level on 19 March. Since the turn of the year the Cineworld share price is up by 44% despite today’s retreat. This comes as the chain is reopening its cinemas in both the US and the UK in April and May respectively.

Cineworld Clashing with Major Investor

Ahead of its AGM on May 12, Cineworld is coming to blows with one of its major shareholders, Legal & General Investment Management (LGIM), as the firm announced its intention to vote against the re-election of the cinema chain’s incumbent chairman, in addition to its renumeration committee.

LGIM said in a statement that it has “strong concerns about the structure of the long-term incentive plan granted to the executives, and its misalignment with the long-term interests of the company, its shareholders and other stakeholders”.

“In particular, we note the impact of COVID-19 on the company’s financials and stakeholders, including furloughs for employees and the suspension of dividends. We also take into account the current social sensitivities around income inequality”, LGIM said.

The timing is not ideal for Cineworld as it looks to reopen its locations across the UK on May 17 in line with the government’s roadmap out of lockdown.

Tesla Share Price: is there a way forward without China?

Liam Roche
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Tesla Share Price: is there a way forward without China?

Tesla Share Price

The Tesla share price closed 7% down yesterday as it was revealed the company’s sales fell in China during April while the electric vehicle manufacturer faced a PR crisis. If the stock falls again today it could reach its lowest point in two months, when Tesla crashed from $863 to $563 in the space of a month. It has been a testing year so far for Elon Musk’s company which is just under 11% down since the end of 2020. As investors turn away from high-valued growth stocks, and Tesla faces ongoing issues in China, now is an opportune time to analyse the stock’s present outlook.

Tesla Halts Plans to Buy Land in Shanghai

Elon Musk appeared to curry favour with China back in March in an effort to secure Tesla’s market position for the long-term. More recently the Nasdaq-listed company was exploring plans buy land to expand its Shanghai plant and make it a global export hub. However, according to reports by Reuters, the plan is no longer going ahead.

Tesla’s factory in Shanghai was built to produce up to 500,000 vehicles every year, and is currently manufacturing the Model Y and 3. According to sources close to Reuters, Tesla is, for now, not looking to boost China production capacity significantly.

Although its sales dropped during April, Tesla made $3bn in revenue in China during the first three months of this year, amounting to 30% of its overall revenue.

Subsequently, the stock fell 3.74% to $605.50 in premarket trading on Tuesday, while shares dipped by 6.44% in Monday’s tech selloff.

PR Issues in China

Tesla is in the midst of an ongoing and significant crisis of confidence in the car maker in China, a market seen as vital for the company’s long-term growth.

In April, a lady climbed onto a Tesla at an auto show to protest against the brakes of the cars not working in her car. The protest went viral on Chinese social networks and state media.

Chinese state media issued a firm disavowal of Tesla’s handling of the women in questions compensation demands.

“The arrogant and overbearing stance the company exhibited in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market,” the state-backed tabloid Global Times said in a separate opinion piece published Wednesday.

A significant portion of Tesla’s growth is coming from China, and the company’s continued success depends on this remaining so. As Elon Musk knows, if the Chinese people or government turn against Tesla, then it will face a major and immediate obstacle. Investors will do well to pay attention to Tesla’s progress in the country in an effort to maintain its meteoric success.

BP Share Price: pressure builds over climate goals ahead of AGM

Liam Roche
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BP Share Price: pressure builds over climate goals ahead of AGM

BP Share Price

The BP share price (LON:BP) is down by 2.09% on Tuesday following a period of solid gains in April when it reached as high as 318.5p. The FTSE 100 oil giant’s upwards movement came alongside increases in the price of Brent crude oil and West Texas Intermediate. Over a longer period BP’s share performance holds up well. Since the beginning of the year its stock value is up by 21.4%. With the company’s much anticipated annual general meeting tomorrow, and its recent announcement of its intention to buy back shares, investors will be paying close attention.

Annual General Meeting

BP’s annual meeting is scheduled for tomorrow, Wednesday 12 May, when there will be calls for the oil giant to redo its carbon emissions plan to make more significant reductions which more closely follow the Paris Climate Accord. While BP’s aim is to slash its production by 40% by 2030 in line with its net-zero target, along with increasing its renewable capacity, its emissions are expected to rise over the same period of time.

There is controversy heading into the meeting as prominent investor group, Calpers, decided to vote against BP’s climate resolution.

BP has previously said that its plan is in keeping with the goals of the Paris Climate Accord, saying it “consistent with the Paris goals” and was a drastic shift from the past. It added: “Going back to the drawing board on strategy, targets and aims would disrupt our business plans” as it rallied its shareholders to vote against the resolution.

While redrawing its plans could negatively impact its financial future, not going further put off investors who want to see a commitment to action in emissions. Whatever the outcome it will be interesting to see the response from investors.

Reduced Debt and Share Buybacks

In an effort to impress investors, BP stated its commitment to buying back shares this year as the company reduced its debt levels quicker than anticipated. The news came as BP announced earlier this month that it expects to reach its $35bn net debt target in Q1 of 2021.

The estimate is a result of earlier-than-expected proceeds from disposals and a “very strong quarter”, the oil company said last week. At the end of 2020, BP had a debt pile of $39bn. The company previously expected to reduce its debt to $35bn by as late as 2022.

“With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early,” said Bernard Looney, chief executive.

Air Partner: A new orbit

Jon Levinson
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Air Partner: A new orbit

Air Partner (LSE: AIR)  82p Mkt Cap:  £52m
Today, Air Partners reported a record set of finals to January 2021. It is the only listed air charter broker and aviation safety & security consultancy and  benefited from Covid stimulated demand for its socially distanced Group Air Charter and extra for freight. 
Its gross profits increased by 31.3% to £44.9m and due to operational leverage the PBT increased 176.2% to £11.6m, which was also supported by cost cutting measures. Founded in 1961, Air Partner is a diversified global avi...

Ark Innovation ETF drops to lowest level since November

Liam Roche
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Ark Innovation ETF drops to lowest level since November

Ark’s major holdings have seen dramatic falls in recent weeks

The Ark Innovation ETF is down to its lowest level since November and has lost 16.5% of its value since the beginning of the year.

Since February, when the $21bn fund hit an all-time-high, the fund has fallen by 33%.

The company’s major holdings have seen dramatic falls in recent weeks, including Tesla, which is down by 6.44% today alone.

Cathie Wood’s flagship fund aims for a thematic multi-cap exposure to innovation across sectors, while seeking long-term growth of capital. This has made it vulnerable to a broader slide of high-valued growth stocks. As the Financial Times reported, this has come about as inflationary pressures have lessened the appeal of businesses which will see profits arrive in the future.

This was reflected by a decline in the Nasdaq composite which features many tech stocks last night.

“The sector rotation today is violent,” Ted Mortonson, a technology sector strategist at Baird, told the Financial Times.

“From a performance anxiety on the upside — a fear of missing out — this is now fear of getting killed.”

The fund also broke below its 200-day moving average, a long term moving average that helps determine the overall health of a stock.

“The issue with ARKK and other speculative growth ETFs is that short-term rallies have been aggressively faded for three months now,” Frank Cappelleri, Instinet executive director, told CNBC. “The ETF will have to do more than just bounce for a few days to convince traders otherwise.”

“In other words, simply getting back above the 200-day moving average won’t mean much without upside follow through. That continues to be the biggest concern,” Cappelleri added.

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