React Energy (REAC)

 

FTSE reverses lower on resources as SPD pounded

London equities ended their first week of 2016 lower, reversing Friday's early gains this afternoon as traders sold resources and punished Sports Direct (SPD) for a profit warning. Europe ended down as Wall St fell on crude oversupply concerns despite well-received jobs data.

FTSE 100 ended 41.64 points lower, or 0.7%, to 5912.44, taking it within range of three-year lows. FTSE 250 fell 59.56, or 0.35%, to 16,732.7. At 4.39pm, WTI crude was at USD32.83/bbl and Brent was at USD33.06/bbl. Safe-haven gold was down but still at a heady USD1102/oz.

Sports Direct (SPD) was slapped 15.11% south to 434.65p as it said tough Christmas trading meant it was no longer confident of meeting its FY adjusted underlying EBITDA target of GBP420m. It sees FY adjusted underlying EBITDA of GBP380m-GBP420m.

Thereafter the key driver was essentially resources. Shell (RDSA) plunged 5.14% to 1379.75p, this on both the price of crude and jitters its planned tie-up with BG (BG.), up 0.52 to 941.8p, will win shareholder approval despite concerns about crude's price. BP (BP.) tapered 2.07% to 330.7p.

Anglo American (AAL) took a 2.85% sortie south to 229.53p and was followed by BHP Billiton (BLT), off 2.63% to 656p. FTSE 350 indices related to mining and oil were down considerably, with that for industrial metals shedding 6.8%.

Resources stocks remain very much exposed to a posse of factors, among them metals-hungry China's economic outlook and potential stock-market volatility, a global supply glut of crude oil and lingering tensions in the Middle East, notably between Saudi Arabia and Iran.

Meantime, risers and fallers were roughly evenly split. Sectors figuring on the fallers' ladder included commercial property, insurance and several utilities. Meantime, Tesco (TSCO) added 6.09% to 147.68p, but other stocks enjoyed more muted gains. Leisure-linked outfits chased easyJet (EZJ), up 3.36% to 1725p. House builders and pharmas were also showing strength.

BIGGER MOVERS

Kimberly Enterprises (KBE), up 85.71% to 0.33p, has agreed to allow the purchaser of the two Canadian residential development plots an extra day to complete the deal, taking the deadline to Jan. 12 in Canada. It said it was unaware of any reason for its sharp share-price hike.

REACT Energy (REAC) jumped 25% to 3.75p as it secured a 0.75m euros loan facility from EBIOSS Energy. It will use proceeds for the continuing investment in its portfolio of biomass gasification projects in the UK.

Sopheon (SPE) jumped 15.08% to 72.5p as it flagged better-than-expected trading. It sees FY revenue in line with market views, but reckons EBITDA and pretax profits will beat market expectations.

ECONOMIC NEWS

Stateside, total non-farm payroll employment rose 292k in December, while the unemployment rate was flat at 5.0% and average hourly earnings came in 1 cent lower at USD25.24, US Bureau of Labor said. Meantime, wholesale inventories totalled USD582.9bn at end-November, down 0.3% from October's revised level but up 2.2% on a year ago, US Department of Commerce said.

UK' trade deficit narrowed to GBP10.6bn in November, from October's shortfall of GBP11.2m. This was partially driven by the fall in the price of crude, which served to cut the value of black-liquid import.

Germany's trade surplus narrowed to 19.7bn euros in November, down from 20.5bn euros in October. Its industrial production eased 0.3% in November, from a 0.5% rise in October. France's trade deficit eased to 4.63bn euros in November, from 4.9bn euros in October.

LONDON HIGHLIGHTS

Games Workshop (GAW) plunged 9.66% to 537.5p after stating FY pretax profit was unlikely to exceed GBP16m. Its return on capital, a key performance metric, fell to 36% in November 2015, from 38% a year earlier.

Photo-Me (PHTM) surged 9.56% to 163.25p after reporting a 90% rise in sales in Japan as a result of the country's introduction of mandatory photo ID cards. It this continued for the remaining four months of the FY, its results would be materially ahead of market views.

Paysafe (PAYS), up 9.55% to 397.13p, sees its FY revenue and adj. EBITDA beating market views, adding strong Q4 trading had completed an overall transformational year.

Venn Life Sciences (VENN) rose 9.52% to 23p on FY revenue being at least double the 4.9m euros recorded in 2014, thanks to new contracts. Non-exec chairman David Evans is stepping down. MySale (MYSL), down 8.18% to 40.63p, noted the movement in its share price this morning and said it knew of no reason for this. The company's shares opened at 43p.

Churchill China (CHH) rose 6.42% to 787.5p on a positive FY trading update. Buoyed by a better-than-expected H2, it said 2015 profits would beat current estimates.

Ventura (VEC) advanced 5.64% to 188.15p on completing a clinical trial for VR315, a generic asthma and chronic obstructive pulmonary disease (COPD) treatment. This moved Ventura closer to receiving a multi-million pound milestone payment.

Crawshaw (CRAW) firmed 4.53% to 86.5p on a reassuring update for the 15 weeks to Jan. 3. Total sales grew 64% with margins strengthening. Like-for-like sales rose 0.8%, good going given serious weather disruption in the north of England during the period.

Other stocks in the news included Watchstone (WTG), Weatherly International (WTI), Spire Healthcare (SPI), Turbo Power Systems (TPS), Gama Aviation (GMAA), Acal (ACL), Bowleven (BLVN), Nichols (NICL), Urban&Civic (UANC) and Audioboom (BOOM).