The UK equity market managed to consolidate early gains during Tuesday’s trading session. The FTSE 100 Index ended the session 0.94% higher at 7077.10 and the midcap FTSE 250 Index ended the session 0.33% higher at 22,730.65.
The UK market benefited from a strong opening across American equity markets where investors bought technology stocks following recent weakness.
This was reflected in the performance of the NASDAQ Composite Index that was trading 1.49% higher at 14,468.52 at the London close. The SAP 500 and the Dow Jones Industrial Average were also firmer by 1.43% at 4,361.78 and 1.34% at 34,456.99 respectively.
The market shrugged off the release of figures from the Society of Motor Manufacturers and Traders showing a 34% slump in car registrations to the lowest level since September 1988.
The shock figure was a result of weak consumer confidence on the one hand and a widespread shortage of semiconductors coupled with supply bottlenecks on the other, impacting the availability of new vehicles.
The latest IHS Markit UK Services PMI reading for September was more encouraging. At 55.4, this marked an improvement on the August figure and was ahead of consensus.
FINANCIALS TO THE FORE.
The UK banks dominated the list of top FTSE 100 performers. Lloyds Banking Group (LLOY), rose 4% to 46.6p, Barclays (BARC) moved 3.8% higher at 194.5p, Standard Chartered (STAN) put on 3.1% to 442p and NatWest Group (NWG) rose 3% to 229p.
Fears that increasing inflationary pressures will cause a further spike in gilt yields has prompted investors to increase their exposure to the sector. Banks benefit from higher interest rates as it enables them to increase their net interest margins.
Engineer Melrose Industries (MRO) recorded a 2% decline to 169p after it reported it had been hit by automotive industry-wide supply constraints, not least in microchips, which knocked its performance there and in its Powder Metallurgy division.
Talk of uncertainty over how long these constraints may last unsettled investors, although the company said it was confident the scale of the impact on profits from any revenue adjustment would be limited due to margin drop-through progress from the restructuring of its operations.
There was more encouraging news from high street food-to-go purveyor Greggs (GRG), which forecast a full-year outcome ‘ahead of our previous expectations’, even though it warned of rising cost pressures.
Greggs’ two-year like-for-like sales for the third quarter were up 3.5% despite staffing and supply chain disruption. The market liked the numbers, marking the shares nearly 11% higher at £31.92
SMALLER CAP WRAP
Furniture and flooring retailer ScS (SCS) edged 0.74% lower to 270p even as it swung to a full-year profit, with talk of supply-chain challenges, including driver shortages, and higher material and shipping costs dragging on the stock.
ScS, which also reported a lower year-to-date order intake, declared a final dividend of 7p per share, upping the full-year payout to 10p, compared to no payout year-on-year.
Industrial laser technology developer Gooch & Housego (GHH:AIM) drifted 0.79% to £12.65 after guiding for full-year results to be ‘slightly ahead’ of expectations amid strengthening demand in the second half of its financial year.
Industrial and medical lasers were demonstrating a sustained recovery, the company said, while telecommunications and life sciences continue to perform well.
Logistics group Wincanton (WIN) jumped 7.2% to 355p in response to its announcement that it was on track to meet profit expectations even as it grapples with the nationwide driver shortage.
In a trading update for the six months through September, Wincanton said it had continued to deliver ‘strong’ revenue growth and agreed rate changes in response to the supply constraints.
Upmarket chocolate retailer Hotel Chocolat (HOTC:AIM) advanced 10.5% to 447p, having swung to a full-year profit as sales growth accelerated following a re-opening of UK stores.
