London open: Stocks little changed; Just Eat in the red
London stocks were little changed in early trade on Wednesday, with investors sifting through a raft of corporate updates amid ongoing worries about the Covid-19 crisis, and ahead of a vote on US President Donald Trump’s impeachment.
At 0850 GMT, the FTSE 100 was up 0.1% at 6,759.87, while sterling was 0.2% higher against the dollar at 1.3694, having risen sharply in the previous session after Bank of England Governor Andrew Bailey cautioned over negative interest rates.
Neil Wilson, chief market analyst at Markets.com, said: "European stock markets were flat in early trade on Wednesday after a mildly positive session on Wall Street and mixed bag in Asia. Reflationary pressures continued as US 10-year rates rose close to 1.2% and the 2s10s curve steepened to its widest since May 2017. Equity markets are coming off record highs and the chop sideways reflects a degree of uncertainty as investors pick their way through the minefield of cases, vaccines, stimulus, reflation and an upcoming earnings season.
"Coronavirus cases are picking up in China, raising concerns about a fresh wave in Asia’s largest economic driver. Chinese stocks were lower, while shares in HSBC and Standard Chartered led the decliners on the FTSE 100 at the open. But progress in vaccinating populations in the UK and US, with Europe moving more slowly but still in the right direction, continues to underpin a broadly positive risk outlook, even if valuations are stretched and rising rates could cause trouble down the line. Investors are probably now looking for a bit of a consolidation and some more visibility over what is coming over the hill in terms of stimulus and vaccines."
In equity markets, Just Eat Takeaway fell even as it said revenue rose by more than 50% in 2020 after UK delivery orders increased 387% in the fourth quarter.
Spreadex analyst Connor Campbell said that while the results might look good at a glance, growth in the second half of 2020 came at a cost, with underlying profit margins dropping from 42% in H1 to 10% for the full year, "reflecting the substantial investments made in Q4".
"It was this disclaimer that caused investors to send back their order," he said.
Persimmon lost ground as the housebuilder reported a drop in full-year completions and group revenues, while PageGroup declined after it said fourth-quarter profit fell by a fifth as tough conditions and Brexit uncertainty in the UK weighed on the recruitment company's performance.
On the upside, Howden Joinery gained as it lifted profits guidance after a better-than-expected performance in the final weeks of the year as locked down Britons spent more time improving their homes during the pandemic.
Gambling firm William Hill nudged up after it said net annual revenue fell 16% to £1.32bn, reflecting the impact of betting shop closures during the Covid-19 pandemic. The company, which is being taken over by US giant Caesars Entertainment, reported a 9% rise in fourth-quarter net revenue.
In broker note action, Intertek was lifted by an upgrade to ‘hold’ at HSBC, while Electrocomponents and Ashtead were both higher after upgrades to ‘buy’ by the same outfit.