FTSE 100 just off modest session peak lacking Wall Street lead; Brewdog in China expansion

Proactive Investors -

• FTSE 100 stays in tight trading range
• US markets shut for President's Day
• House prices stabilise in February - Rightmove

Power of the Dog

Craft beer firm BrewDog is expanding its operations in China, after signing a partnership with brewing giant Budweiser which will see a further nine Brewdog bars opened in China, adding to one it already has trading in Shanghai.

Privately owned Brewdog already has a small production line in China, which brewed 6.5mln hectolitres in 2020, out of a total 341mln hectolitres made collectively across the country.

China accounts for just 1% of Brewdog’s global sales currently, with the new partnership aiming to up its stake in the country's market, which has grown over the past decade to become the world’s largest producer and consumer of beer.

Brewdog, which was founded in Scotland in 2007, partnered with Japanese brewer Asahi in 2021 as part of its bid to expand into the Asian market, with the new deal also set to boost operations in South Korea.

Lacking direction

The FTSE 100 index edged higher in early afternoon trading, holding above the 8,000 level but failing to move much in the absence of any US lead today, with Wall Street closed for the President's Day public holiday.

Around 2.10pm, the UK blue-chip index was up 13 points, or 0.2%, at 8,017, just below the session peak of 8,018.56, having only reached a low of 8,004.36.

Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: "Stock markets in Europe are treading water in thin trade at the start of the week amid a light economic calendar and a US bank holiday.

"It was always likely to be a slow day under the circumstances and that's exactly what it's turning out to be. Stock markets remain in a surprisingly strong position despite the uncertain outlook and rising interest rate expectations due to stubborn inflation.

"While other areas of the market appear to have adopted a more defensive position, equity investors remain undeterred. It would appear it's going to take a lot more than a few nasty economic releases to put a dent in their optimism."

1.30pm: A quick look at some of today's risers and fallers

Pineapple Power - up 49% to 3.7p: The cash shell announced Graham Cooley, the former chief executive of hydrogen electrolyser pioneer ITM Power, had joined its advisory board. Cooley, who stepped down in September, joined ITM in 2009 shortly after which it became the first hydrogen-related company to be listed on the London Stock Exchange.

Proteome - up 31% to 4.92p: Shares spiked after it said revenues last year grew by more than half, while its cash position improved markedly too. In a trading update, the group, a specialist provider of contract proteomics services used in drug discovery, said turnover for the 12 months ended 31 December 2022 increased 53% to around £7.8mln.

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Upland Resources - up 13% to 0.6p: Upland's shares moved sharply higher on Monday as the explorer announced that cornerstone investors would provide a £1.25mln injection of capital into the company. Investors committed to subscribe for 208.3mln new shares in the company at a premium price of 0.6p per share

Verditek - down 17% to 0.6p: Shares plummeted after the UK clean technology firm revealed its distribution agreement with Bradclad was terminated. The move followed a lack of new orders since June 2022 and an announcement in October stating that Bradclad was engaging with another manufacturer.

Tekcapital - down 16% to 17p: Shares moved lower in Monday morning’s deals, pricing in equity dilution from its latest share placing. The investment firm, in a statement, said it would be issuing 14mln new shares priced at 16p each to raise £2.25mln of new capital in a placing arranged by stockbroker SP Angel.

Virgin Media eyeing bid for Trooli - Sky

Virgin Media O2 and its shareholders are exploring a takeover bid for Trooli, one of the UK's army of 'altnet' fibre broadband companies, according to a report.

Sky News has learnt that the telecoms giant, which is jointly owned by Liberty Global (NASDAQ:LBTYA) and Spain's Telefonica (BME:TEF), is among a substantial number of parties examining offers for Trooli as part of a formal auction process.

Telecoms industry sources said any offer was likely to be worth in excess of £100mln.

Trooli is exploring a sale amid growing pressure on the deluge of alternative network - or altnet - providers which have sprung up in the last decade as part of efforts to transform Britain's communications infrastructure.

The market is dominated by BT Group (LON:BT)'s Openreach division, but also includes large competitors such as CityFibre Holdings.

Meanwhile, big news the FTSE has moved from up one point to down one point at 8,003 as it remains subdued to say the least.

German economic outlook brightens, inflation pressures remain

Germany’s economic prospects are improving, the country’s central bank believes, as energy prices ease and the global economy picks up.

In its latest monthly report the Bundesbank said that the economic outlook for Germany was “somewhat brighter”, despite persistent high inflationary pressures.

It predicted that the end of the zero-COVID policy in China is likely to pave the way for a global economic recovery.

One source suggested that a partial sale or joint venture could also be an option for the retailer.

A banking analyst suggested this weekend that if it was sold, Tesco Bank could be worth more than £1bn based on its book value.

The company has more than 5mln customers, offering products including pet insurance, savings accounts and credit cards.

Ken Murphy, who has been Tesco's chief executive since 2020, has been publicly supportive of its presence in the banking sector.

Harland & Woolf wins new deals

Harland & Wolff Group Holdings PLC has secured contracts worth over £10mln within the defence, cruise & ferry and commercial fabrication markets.

The Belfast-based shipbuilder said the six contracts are expected to be completed during the next 12-18 months.

The AIM-listed firm did not disclose further details, due to confidentiality terms, but said that work on four of the contracts will commence this month in Belfast.

These contracts will involve fabricating a drydock gate for a client that operates a defence facility, repairs on a jack up barge that is used for installation of offshore structures, as well as regular repair works on five vessels comprising a product tanker and four ferries.

In Arnish, the company has been contracted to undertake additional fabrication works for an ongoing mining project while it has been contracted to fabricate a frame at its Appledore facility for a prime contractor as part of its ongoing defence programme.

Chief Executive John Wood said: “Since the commencement of 2023, we are seeing an uptick in the level of enquiries flowing through all the yards for multiple projects.”

Firm start seen by Footsie

FTSE 100 is expected to open higher back above 8,000 on what could be a quiet day with little in the way of company and economic news expected and with US markets closed for President’s Day.

Spread betting companies are calling the lead index up by around 16 points.

“Today looks set to see markets in Europe open modestly higher against a backdrop of continued weakness in energy prices, which is relieving some of the worst case economic scenarios that were being modelled at the end of last year. Its also likely to be a relatively subdued session given the absence of the US due to the President’s Day holiday,” commented CMC’s Michael Hewson.

In Asia, he People's Bank of China left its benchmark lending rate unchanged, an outcome in line with market expectations.

The move provided support to the Shanghai Composite which was up 2.0% in late trade while the Hang Seng climbed 1.1% in Hong Kong. In Tokyo, the Nikkei 225 edged up 0.1% on Monday. The S&P/ASX 200 in Sydney also climbed 0.1%.

US markets ended mixed on Friday with the Dow up 130 points, 0.4%, at 33,827, the Nasdaq Composite down 66 points, 0.6%, to 11,787 while the S&P 500 shed 11 points, 0.3%, to 4,079.

Comments by a number of Federal Reserve officials forecasting further interest rates rises unsettled investors who had hoped that cooling inflation would prompt a pivot in Fed policy.

A quiet day for company news in London is expected on Monday ahead of a busy week with Lloyds, HSBC, International Consolidated Airlines, Rolls-Rocye BAE Systems among the firms reporting.

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