Funds tracking the FTSE 100 could be putting Wm Morrison back into their basket, with the supermarket chain poised to stage a swift return to London’s premier share index.
Morrisons was demoted to the FTSE 250 mid-cap index in December in the heat of the industry price war. Yet the shares have rallied hard since. Having hit a 15-year low about 12 weeks ago, they have rebounded by about 46 per cent and were snapped up by investors at the start of the week after the grocer announced a supply deal with Amazon, under which the American retailer will sell the Bradford-based company’s lines.
The recovery has put Morrisons, up more than 4p to a shade above 203p yesterday, in contention to be returned to the FTSE 100 at the first time of asking when a committee meets to confirm changes today as part of a quarterly review.
The reshuffle will be based on closing prices last night, but indicative positions suggested that Morrisons could join Paddy Power Betfair and Mediclinic International, the private healthcare company, after both were recently involved in mergers and acquisitions. Informa, the academic publishing and events group, is also in the running.
Among the big guns potentially heading into the FTSE 250 are Aberdeen Asset Management, which has been weakened by the slowdown in emerging markets; Sports Direct, hit by concerns about corporate governance and working practices; and Hikma Pharmaceuticals.
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The promotions and relegations will be confirmed after the close today and will take effect from March 21.
The Footsie extended its recovery to rise by 55.79 points, or 0.92 per cent, to 6,152.88, within 90 points of where it ended last year, as bets that central banks would continue to ease monetary policy supported equities. London Stock Exchange was the biggest riser, up 192p to £28.70, after Intercontinental Exchange, owner of the New York Stock Exchange, confirmed that it was weighing up an offer for the LSE, which is in merger talks with Deutsche Börse. A potential bidding war helped to lift sentiment as several downbeat corporate updates stemmed gains.
Better-than-expected results from Direct Line, where profits and premiums rose, pushed shares in the insurer up 21p to 409½p, but the three biggest fallers were marked down after updates. Ashtead, under pressure from short-sellers, fell as much as 18.5 per cent before paring losses to close down 81½p at 842½p, despite third-quarter profits coming in ahead of some analysts’ forecasts. Barclays also fell sharply, dipping nearly 14p to 158p after posting full-year profits of £5.4 billion, below the City’s forecasts, and announcing a halving of its dividend.
Miners of precious metals were among the biggest fallers. Fresnillo, down 6¼p to 938p, said at its full-year results that there did not “appear to be a clear catalyst that would support a return to higher prices”.
Away from the main market, Tribal Group, the education software company, appeared to have recovered from a profit warning in December, rallying 9½p to 49p after agreeing to sell its Synergy division for £20.25 million to Servelec Group, up 17p at 335p, which also posted annual results. Traders said that Eckoh, the payments company down ½p at 42½p, could rally after N+1 Singer cleared a known seller.
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Canaccord decides that it can’t
Hardly a day goes by without upheaval in City stockbroking. The industry, squeezed by slowing activity in the junior market and regulatory pressure, is tipped for further consolidation as firms struggle to turn a profit.
It was the turn of Canaccord Genuity yesterday to respond to these headwinds. It announced that it was delisting from the London Stock Exchange, fromApril 1, because of little dealings in its shares and the costs and “administrative burden” of maintaining a listing on the main market.
The independent financial services provider, whose shares have traded in London since July 2012, will retain its listing in Toronto, where it is based. The move comes after the Canadian company announced its biggest loss since it went public in 2004 last month and suspended its quarterly dividend.
Canaccord also announced that it was cutting 125 jobs, 12 per cent of its capital markets and infrastructure staff in Canada, Britain and the United States as it looks to cut costs in a restructuring led by Dan Daviau, its chief executive.
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The sentiment on trading floors has been one of “there but for the grace of God go I”.
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