Ocado records sharp rise in revenue, Next takes majority stake in Victoria's Secret UK

London open

The FTSE 100 is expected to open four points higher on Tuesday, having closed down 0.1% at 6,026.25 on Monday.

Stocks to watch

Online grocer and technology firm Ocado recorded a sharp rise in third quarter revenue driven by continued higher average spends as it forecast annual core earnings of £40m. The company, which has started its new partnership with Marks & Spencer, said revenue in the 13 weeks to August 30 grew 52% to £587.3m with average weekly orders up 9.6% to 345,000.

Next has acquired a majority stake in the UK and Irish arm of L Brands's Victoria's Secret unit for an undisclosed sum as part of a joint-venture agreement. The unit went into administration in June after being forced to shut its 25 stores due to the pandemic. Its owner was unable to clinch a sale to Sycamore Partners earlier in 2020. Next would own 51% of the new JV, which in turn would acquire most of Victoria's Secret's UK assets and operate its stores in the country and in Ireland. L Brands would own the remaining 49%.

Chemring said on Tuesday that, despite a challenging environment, trading in the year so far had progressed as planned, with order intake to 31 August up 4% on the same time last year and its order book standing at £452m. The company said its expected outturn for the year ending 31 October was towards the upper end of current analyst expectations.

Newspaper round-up

The government is under pressure to intervene in the $40bn (£31bn) takeover of the UK’s biggest tech company, Arm Holdings, after Labour, trade unions and the company’s co-founder voiced concerns about the deal. The US software firm Nvidia said on Monday it had agreed to buy Cambridge-based Arm, a global leader in designing chips for smartphones, computers and tablets, from Japan’s SoftBank. - Guardian

Renters are swapping inner London transport hubs for homes further afield as the need to commute has become less important than a desire for space, data on searches on property website Rightmove suggests. Analysis of 60m searches in August showed steep falls in the number of searches for rental homes in commuter hubs such as Earl’s Court in west London, and New Cross in the south, while areas in outer London and beyond registered big increases. - Guardian

Airlines and airports delivered a double dose of bad news as Emirates prepared to swing the axe on its UK workforce and London City Airport announced plans to cull up to a third of its staff. Emirates warned its almost 600 of its employees based in Britain of the need to "consider reducing the size of the UK workforce". Quarantines, border controls and other travel restrictions have left passenger demand for air travel "extremely subdued", according to an internal email seen by The Telegraph. - Telegraph

A vote today on a vital restructuring for New Look is on a knife-edge as a host of the retailer’s biggest landlords plan to object to the proposals. British Land, owner of the Meadowhall shopping centre in Sheffield, and NewRiver REIT are among the property owners intending to oppose the proposed company voluntary arrangement. Hammerson, the owner of Birmingham’s Bullring, and Land Securities are also intending to vote against the restructuring, Sky News reported. Together the landlords own about 55 of New Look’s 490 UK store sites. - The Times

Britain’s traditional pension funds would need fantastically improbable returns from shares to erode their huge deficits over the next ten years, according to a warning yesterday from one of the pension industry’s leading consultants. Share markets over the past three centuries have delivered an average of 3.1 percentage points a year in excess of cash returns, yet pension funds would on average need excess returns of 9 percentage points to clear their shortfalls, Willis Towers Watson said. - The Times

US close

Wall Street stocks closed higher on Monday as a raft of corporate deals and optimism around a Covid-19 vaccine led a broad market rally.

At the close, the Dow Jones Industrial Average was up 1.18% at 27,993.33, while the S&P 500 was 1.27% stronger at 3,383.53 and the Nasdaq Composite saw out the session 1.87% firmer at 11,056.65.

The Dow Jones closed 327.69 points higher, extending gains recorded by the index in the final session of last week's volatile trading.

Sentiment got a slight boost from news that chipmaker Nvidia had agreed to buy competitor Arm Holdings from Japan's SoftBank for $40.0bn - which it will finance through a combination of cash and common stock.

Also in deal news, TikTok parent ByteDance rejected Microsoft's bid to buy it US operations, opting instead to make Oracle its US partner, providing it with a significant stake in the business, while Gilead agreed to acquire Immunomedics as part of an effort to expand its cancer treatments.