Having finished last week on the back foot, equity markets in Europe appear to be taking their cues from events in Turkey, where President Erdogan unexpectedly replaced his central bank governor at the weekend, after a sharp increase in interest rates was implemented on Thursday last week.
The prospect of extended lockdowns across Europe, with both France, Germany and Italy announcing further measures over the weekend, also isn’t helping with the biggest early fallers being in the likes of travel and leisure sector, with IAG, Intercontinental Hotels, EasyJet and Ryanair all getting clobbered, as the prospect of European summer holidays recedes.
While the prospect of a big European restart on the summer holidays front was always a long shot, events over the weekend have made the prospect even more remote, as the prospect of a third wave across Europe pushes the prospect of any sort of economic restart into the back end of Q2.
Meanwhile, as European share trading gets set for a new week, the various missteps in the EU’s response to its vaccination program could well be compounded by reports that the bloc is considering various measures to shore up its supply chain, including the blocking of vaccine exports to the UK.
This would be in response to what is perceived as a lack of urgency from AstraZeneca in terms of fulfilling its obligations to the EU’s vaccination program, at a time when further lockdown restrictions are being considered by both the German and French governments, as the virus continues to run riot there.
While AstraZeneca continues to be embroiled in the political spat between the EU and the UK, there is some good news after the company announced that its phase 3 trial of Covid vaccine in the US showed a 79% efficacy, and 100% efficacy against severe or critical disease and hospitalisation, across all age groups, including the over 65’s, where its efficacy in Europe has been called into question. Even more importantly there were no reported safety issues with respect to blood clots, which is very welcome. However, it is likely to come too late to reverse the enormous damage done to its reputation over the past few weeks by various European politicians to its brand, and as such the resulting slow vaccine uptake is likely to delay a European reopening even further, with serious consequences for the likes of Spain, Greece and Italy which rely so much on the summer holiday season.
Online delivery provider Deliveroo this morning provided further details of its upcoming IPO, setting its IPO price range at between £3.90 to £4.60 per share, implying a market cap of up to £8.8bn. The number of shares being made available will be up to 384.6m shares.
The company also provided a trading update announcing that the total value of transactions it processed on its platform was up 121% year on year in January and February, while underlying gross profit margins increased to 8.8%.
The proceeds from the IPO will be used to invest in the business and attempt to bring more meal transaction volumes intended to the online space.
B&Q and Screwfix owner Kingfisher has been one of the few retailers to do well from the pandemic. Classed as an essential retailer the business has been able to remain open and while there have been higher costs, these appear to have been more than offset by even higher sales volumes.
Full year sales increased 6.8% to £12.34bn, driven largely by an increase in e-commerce which saw an increase of 158%, and now account for 18% of total group sales, compared to 8% a year ago. UK and Ireland trading was particularly robust with Screwfix exceeding £2bn in sales for the first time ever.
Adjusted pre-tax profits came in at £786.6m, well above the upper estimate of £742m, and a 634% rise from a year ago. As a result of taking the decision back in December to return its £130m business rates relief, management have decided to resume the dividend with a proposed total dividend of 8.25p per share.
In terms of the outlook, current trading has been positive, with H1 2021/2022 expecting to see low double digit LFL sales growth, while H2 is likely to see a slowdown in comparable sales relative to the second half of the year just gone.
Having slipped back at the end of last week, oil prices are continuing to come under pressure as the prospect of a slower economic reopening in Europe weighs on demand considerations. While both the US Federal Reserve, and the Bank of England revised up their growth forecasts last week, it is notable that expectations for 2021 for the EU are being guided lower, over concerns about the effect that longer and tighter restrictions will have on the ability of the likes of France, Germany, Italy and Spain to show any sort of growth in the first half of this year.
US markets look set for a broadly softer open, however the Nasdaq could see a bit of a rebound as US bond yields slide back further from their recent highs.
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