London midday: Stocks turn higher as Sainsbury’s rallies

London stocks had reversed opening losses to trade a little higher by midday on Monday, with all eyes on Chinese property developer Evergrande after its shares were suspended.
The FTSE 100 was up 0.2% at 7,038.97.

Joshua Mahony, senior market analyst at IG, said: “Overnight suspension of Evergrande shares raised fears of a debt default, yet reports that they are instead selling a 51% stake in their portfolio instead allayed concerns for now.

“The proposed $5.1bn deal would provide crucial cashflow at a time of need, yet the questions remain over whether these fire-sales will be enough to stave off an eventual collapse that has been speculated as the biggest default in history.

“Meanwhile, US-China trade wars could be back on the agenda after the US warned of potential tariffs given Chinese non-compliance over agreements made within the phase one trade deal. With lofty expectations over the potential for US-China trade to build on that first phase deal, it is evident that they will likely spend more time enforcing the first than building a framework to agree a second.

“Logistical issues are causing havoc around the world, with the Chinese experiencing an energy crisis and the UK struggling to fill the pumps fast enough to keep people on the roads.”

In equity markets, BT was under the cosh, with traders pointing to a Telegraph article suggesting that Sky is closing in on a deal with Virgin Media O2 to become an investor in the telecoms operator’s full-fibre broadband rollout.

Morrisons was also in the red after US private equity group Clayton, Dubilier & Rice won an auction for the supermarket chains with a £7bn bid. The win was revealed by the Takeover Panel on Saturday. CD&R offered 287p a share, against a rival bid from Fortress, for 286p per share. Rival Sainsbury’s was the top gainer on the FTSE 100, while Tesco also advanced.

Russ Mould, investment director at AJ Bell, said investors were speculating that Sainsbury’s would be the next takeover target in the supermarket sector.

“Fortress, which was unlucky in the Morrisons bid, is seen to be eager to make a large transaction, so one must wonder if Sainsbury’s is the next logical business to tick all the right boxes for the US dealmaker,” he said.

Elsewhere, Mike Ashley’s Frasers Group was knocked lower by a double-downgrade to ‘underperform’ at Bank of America Merrill Lynch.

Online trading platform Plus500 rose as it said it now expects 2021 revenue and core earnings to be ahead of analyst forecasts after delivering “further positive momentum” in the third quarter.

Market Movers

FTSE 100 (UKX) 7,038.97 0.17%
FTSE 250 (MCX) 22,901.29 -0.32%
techMARK (TASX) 4,580.33 -0.06%

FTSE 100 – Risers

Sainsbury (J) (SBRY) 295.40p 3.83%
Informa (INF) 571.20p 1.85%
Ocado Group (OCDO) 1,672.50p 1.67%
Admiral Group (ADM) 3,182.00p 1.63%
Tesco (TSCO) 251.50p 1.43%
Diageo (DGE) 3,571.00p 1.13%
Smurfit Kappa Group (CDI) (SKG) 3,834.00p 1.08%
Evraz (EVR) 576.80p 1.05%
Aviva (AV.) 397.90p 1.04%
Sage Group (SGE) 707.40p 1.00%

FTSE 100 – Fallers

BT Group (BT.A) 148.40p -6.58%
Morrison (Wm) Supermarkets (MRW) 285.80p -3.77%
Pearson (PSON) 715.80p -1.46%
ITV (ITV) 107.70p -1.37%
Johnson Matthey (JMAT) 2,616.00p -1.28%
Royal Mail (RMG) 411.30p -1.27%
Compass Group (CPG) 1,539.50p -1.22%
Whitbread (WTB) 3,366.00p -1.17%
Lloyds Banking Group (LLOY) 44.78p -1.01%
Pershing Square Holdings Ltd NPV (PSH) 2,640.00p -0.94%

FTSE 250 – Risers

Plus500 Ltd (DI) (PLUS) 1,455.00p 5.43%
Babcock International Group (BAB) 377.70p 2.72%
Energean (ENOG) 904.00p 2.26%
Marks & Spencer Group (MKS) 184.35p 1.51%
QinetiQ Group (QQ.) 321.20p 1.13%
Chemring Group (CHG) 314.50p 1.13%
Tritax Big Box Reit (BBOX) 216.80p 1.12%
Games Workshop Group (GAW) 10,030.00p 1.06%
Biffa (BIFF) 358.00p 0.99%
Darktrace (DARK) 801.50p 0.94%

FTSE 250 – Fallers

Frasers Group (FRAS) 625.50p -6.08%
Network International Holdings (NETW) 346.60p -4.91%
Auction Technology Group (ATG) 1,290.00p -4.73%
Trainline (TRN) 343.80p -3.97%
Future (FUTR) 3,614.00p -3.83%
Restaurant Group (RTN) 101.60p -3.79%
Moonpig Group (MOON) 305.40p -3.23%
JPMorgan Japanese Inv Trust (JFJ) 653.00p -2.97%
Fidelity China Special Situations (FCSS) 306.00p -2.86%
Redde Northgate (REDD) 399.00p -2.68%

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