London midday: Stocks push higher as Ocado surges on guidance upgrade

London stocks were firmly in the black by midday on Monday, helped along by a strong performance from Ocado, hopes of a Brexit deal and better-than-expected manufacturing data, as investors braced for a second national lockdown and the US presidential election.

The FTSE 100 was up 1.3% at 5,647.87, reversing earlier losses.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ''The FTSE 100 has been keeping its head above water as warnings about the financial impact of another lockdown wash in, while a potential life buoy comes into sight as talks resume in Brussels offering fresh hopes for a Brexit breakthrough.

"There is renewed hope that a compromise on fishing rights between the EU and the UK is close to being reached which has proved a major stumbling block in the negotiations."

Bloomberg cited sources as saying that UK and EU officials are getting closer to a compromise on the issue of what access EU boats will have to UK fishing waters.

On the macroeconomic front, a survey showed UK manufacturing activity beat expectations in October as the sector expanded for the fifth month running.

The IHS Markit/CIPS purchasing managers' index weakened to 53.7 from 54.1 in September but the result beat an initial calculation and consensus estimate of 53.3.

Rob Dobson, director at IHS Markit, said: "October saw the UK manufacturing recovery continue, albeit with the upturn losing momentum amid ongoing lockdown measures and signs that growth could weaken further in coming months after Brexit-related stockpiling.

"The main drag was a fall back into contraction for the consumer goods industry, blamed in part on lockdowns and falling demand as virus worries intensified among households."

Investors were also looking ahead to the US presidential election on Tuesday. Richard Hunter, head of markets at Interactive Investor, said: "The polls are showing that the outcome remains uncertain, with Biden still ahead.

"However, from a wider perspective the possibility of a delayed or contested result would put further pressure on markets which have suffered the recent disappointments of renewed lockdown concerns, the lack of an interim fiscal stimulus and even some quarterly results from big tech which were not enough to keep up with lofty expectations."

In equity markets, Ocado surged as the online supermarket increased its guidance for annual earnings to more than £60m from more than £40m as consumers switch to online shopping. The company also agreed to buy Kindred Systems, a piece-picking robotics company, for about $262m and robotic arm designer Haddington Dynamics for $25m.

Just Eat Takeaway was a high riser amid expectations that people will be ordering in food more once the second lockdown takes effect.

B&M European Value Retail was trading up after RBC Capital Markets reiterated its ‘outperform’ recommendation on the stock.

Supermarket chains Sainsburys, Tesco and Morrisons all gained, with delivery slots hard to come by and shoppers stocking up again before the lockdown.

On the downside, travel and leisure-related stocks took a hit ahead of the upcoming lockdown and travel restrictions. British Airways parent IAG, Cineworld and pub chains Wetherspoons and Mitchells & Butlers all fell. However, travel company Carnival was the top gainer on the FTSE 250.

Retailer JD Sports was also in the red as it prepares to shut its stores again, while Primark owner Associated British Foods slumped after saying it expects to lose £375m in sales as new Covid-19 lockdowns across Europe forced the closure of its stores.

Ladbrokes owner GVC was down after it warned that core earnings could fall by up to £43m as new coronavirus restrictions were imposed on its European shops.

Shares of outsourcer Serco tumbled after it lost a Ministry of Defence contract to provide nuclear warheads but reiterated its full-year guidance.

Brickmaker Ibstock slid after Deutsche Bank downgraded the shares, saying they’re up with events.

Market Movers

FTSE 100 (UKX) 5,647.87 1.27%
FTSE 250 (MCX) 17,216.38 0.01%
techMARK (TASX) 3,593.91 0.46%

FTSE 100 - Risers

Ocado Group (OCDO) 2,506.00p 10.11%
Kingfisher (KGF) 300.10p 4.53%
B&M European Value Retail S.A. (DI) (BME) 502.60p 3.67%
CRH (CRH) 2,819.00p 3.64%
Sainsbury (J) (SBRY) 208.20p 3.42%
Melrose Industries (MRO) 123.65p 3.34%
Fresnillo (FRES) 1,200.50p 3.27%
Smurfit Kappa Group (SKG) 3,000.00p 3.16%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,836.00p 3.13%
Relx plc (REL) 1,572.00p 3.08%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 715.00p -3.53%
NATWEST GROUP PLC ORD 100P (NWG) 120.60p -2.90%
GVC Holdings (GVC) 948.60p -1.82%
International Consolidated Airlines Group SA (CDI) (IAG) 94.70p -1.80%
Lloyds Banking Group (LLOY) 27.55p -1.69%
Avast (AVST) 466.40p -1.69%
WPP (WPP) 606.40p -1.65%
Auto Trader Group (AUTO) 569.80p -1.31%
United Utilities Group (UU.) 853.60p -1.07%
St James's Place (STJ) 888.60p -1.02%

FTSE 250 - Risers

Carnival (CCL) 904.20p 6.55%
Grafton Group Ut (GFTU) 696.50p 3.57%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,836.00p 3.13%
Scottish Inv Trust (SCIN) 702.00p 3.08%
QinetiQ Group (QQ.) 243.40p 2.96%
Hiscox Limited (DI) (HSX) 848.40p 2.91%
Cairn Energy (CNE) 142.80p 2.73%
JPMorgan American Inv Trust (JAM) 516.00p 2.58%
Centamin (DI) (CEY) 127.15p 2.58%
Marks & Spencer Group (MKS) 91.26p 2.38%

FTSE 250 - Fallers

Serco Group (SRP) 112.70p -12.91%
Cineworld Group (CINE) 26.31p -7.72%
Ibstock (IBST) 150.30p -6.41%
Trainline (TRN) 258.60p -5.96%
Watches of Switzerland Group (WOSG) 372.00p -5.82%
Frasers Group (FRAS) 358.20p -4.43%
Liontrust Asset Management (LIO) 1,195.00p -4.40%
Wetherspoon (J.D.) (JDW) 829.00p -3.83%
SSP Group (SSPG) 179.60p -3.80%
Plus500 Ltd (DI) (PLUS) 1,423.00p -3.56%