Shares round-up: FTSE 100 extends winning streak

Despite ongoing concerns around the pandemic, UK stocks are starting to reflect optimism on Wall Street.

A robust FTSE 100 index took its winning streak into a fourth session today, with the growing mood of optimism further enhanced by updates from a band of smaller stocks.

The blue-chip index jumped 1.7% to 6,287 as risk appetite benefited from coronavirus vaccine hopes and yesterday's surprise first improvement in China import data since the pandemic started. Broker UBS said today it saw no reason why the upward trend for equities cannot continue, albeit with bouts of volatility caused by the pandemic and geopolitical events.

The Swiss bank said that recent evidence, such as the China figures, pointed to the economic recovery gaining traction, adding: “This all underlines our case that investors should remain invested and stick to their long-term plans rather than retreating into cash.”

The message was reflected in some of London's previously bombed-out stocks, with British Airways owner International Consolidated Airlines Group (LSE:IAG) up 3% near the top of the FTSE 100 risers board.

The bouts of volatility facing investors include the kind experienced by holders of Burberry (LSE:BRBY) and Dixons Carphone (LSE:DC.) shares. The luxury goods firm slumped 6% after warning in its AGM update that it will take time for sales to recover from the pandemic impact. Dixons fell 9% in the wake of full-year profits showing that profits had halved, with the outlook also uncertain.

There was precious little respite for owners of banking stocks, with the start of the US reporting season doing little for confidence after three of Wall Street's biggest lenders set aside $28 billion for bad debt provisions. Royal Bank of Scotland (LSE:RBS) fell 1% to 119.6p and Lloyds Banking Group (LSE:LLOY) dipped back below the 30p threshold.

Barclays (LSE:BARC) and Virgin Money (LSE:VMUK), who we revealed yesterday as the favoured picks of analysts at Deutsche Bank, fell less than 1% to 118.6p and 0.2p to 91.42p.

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The domestic-focused FTSE 250 was more than 1% higher, with Aston Martin Lagonda (LSE:AML) rallying 4% and Cineworld (LSE:CINE) improving 3% ahead of the re-opening of its cinemas in the UK and United States later this month.

Dunelm (LSE:DNLM) rose 3% after the homewares retailer reported that pent-up demand and the delayed start of its summer sale had helped sales to jump 20% in June. The figure across the fourth quarter was still 28.6% lower, albeit offset by a surge in online business during the lockdown.

The popular stock has doubled in value since mid-March to reach 1,184p today, having been at a record 1,400p prior to the crisis in February. Elsewhere in the retail sector, ASOS (LSE:ASC) shares failed to hold on to initial gains seen after it revealed a 10% rise in sales for the four months to the end of June. While the group has seen a steady improvement in trading, it is worried that its 20-something customer base will bear the brunt of the uncertain economic outlook.

Galliford Try (LSE:GFRD) was one of the stocks to offer reassurance that it is benefiting from a pick-up in activity as lockdown restriction ease. The group sold its housebuilding businesses earlier in the year and is now firmly focused on regional building, highways and environment.

Productivity levels have gradually increased since the beginning of the lockdown and are now close to normal, meaning operating margins should improve in line with the company's target. 

While it is still too early to restore guidance, Galliford said it has entered the new financial year with “a high-quality, carefully risk managed order book” of £3.2 billion, with 90% of the new financial year's planned revenue already secured. Shares jumped 8% to 108.64p.

Today's positive update from Carr's Group included a promise that its deferred dividend from the period up to the end of February will be paid in October. This follows a stronger-than-expected performance by its agriculture division, which sells animal feed and supplements alongside the running of country retail stores.

Its engineering division has been affected by interruptions to nuclear and defence projects, but the overall performance has been resilient with cash levels ahead of expectations. 

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Homewares business Portmeirion Group (LSE:PMP) also sounded an upbeat tone after the maker and distributor of brands including Spode, Royal Worcester and Pimpernel said it was confident that it will return to profitability in the second half of the year. Shares rose 4p to 364p.

CEO Mike Raybould said he was pleased at the improving trend for sales in June, as well as how the company had withstood the impact of global lockdowns over the first half of the year.

He added:

“Although there remains considerable economic uncertainty in our key markets, we are cautiously optimistic for the second half of 2020.”