The FTSE 100 finished higher on Wednesday, retracing the losses from Tuesday’s sell-off amid a jump in financials and as AstraZeneca (AZN) and Next (NXT) rallied following M&A and trading updates, respectively.
The benchmark FTSE 100 ended the day 1.14% up at 7,108.16, and while worries over inflation, energy and supply chain issues will remain on the market’s mind, the index is chock full of multinational stocks which benefit from a weaker pound.
On that note, the GBP/USD dropped to its lowest level since December last year, when the uncertainty surrounding a potential no-deal Brexit was at its peak. It’s difficult to pin the recent weakness on one factor but the petrol pump queues are not helping matters, whether that is a psychological effect or fears that the fuel shortages may drag out the economic recovery for longer.
US stock markets also opened higher on Wednesday, in a modest rebound from their worst one-day loss in months on Tuesday. But the early bounce was less pronounced than index futures had indicated, suggesting that market participants remain essentially cautious, if not outright bearish, as political theatre plays out in Washington with the government debt ceiling approaches its ritual climax.
BUMPER FASHION SALES
Fashion retailer Next saw its share price jump after upping full year guidance alongside rising interim profits.
Shares in the company rallied nearly 4% to £83.94 as investors welcomed news that Next is reaping the benefits of post-pandemic store re-openings. Profit for the six months to 31 July rose 5.9%, compared to 2019 figures, to £346.7 million, driven by a 7.6% increase in sales, which hit £2.2 billion.
Next is guiding towards a pre-tax profit for the full year of £800 million, up 6.9% versus 2019 and £36 million ahead of its previous guidance. The company has also declared a special dividend of 110p per share.
Investors will now turn their attention to the key Christmas run-in, with Next set to report an update on 6 January 2022.
Pharmaceutical company AstraZeneca topped the FTSE 100 leader board after it revealed that its recently acquired Alexion business will purchase the remaining shares of Caelum Biosciences offering a potential treatment for amyloidosis. The acquisition is expected to close on 5 October 2021, with an agreed option price of around $150 million.
There is potential for additional payments of up to $350 million if regulatory and commercial milestones are met. AstraZeneca shares cosed close to 4% higher at £88.05.
Royal Mail (RMG) was the biggest faller in the leading index, after a broker downgrade. Its shares lost almost 9% to 437p as UBS slashed its rating from buy to sell and cut its price target from 590p to 440p as it believes the company faces rising costs.
TRAVEL TROUBLE REMAINS
Airport food and travel owner SSP (SSPG) was also a heavy loser, its shares slumping nearly 5.5% to 274p, after issuing a distinctly cautious outlook despite revealing positive earnings in the fourth quarter of the financial year. Revenue in the latest week of the year was 53% of 2019 levels. Fourth quarter recovery had enabled the group to re-open 60% of its outlets, up from 30% at the end of the first half of 2021.
‘Reflecting this, our expectation for profit conversion on reduced sales in 2022 compared to 2019 continues to be at the upper end of a range of 25% to 30%,’ the company said. Shares were trading -3.2% at 280.3p
Power utility SSE (SSE) has agreed to form a joint venture with Pacifico Energy to pursue offshore wind developments in Japan.
The pact involved the acquisition by SSE of 80% of an offshore wind development platform from the Japanese company for $208 million. SSE Renewables has the largest offshore wind pipeline across UK and Ireland at 7GW and is currently leading the construction of more offshore wind than any company in the world.
It has a renewable output target of 30TWh a year by 2030, which it expects to exceed and has clear aspirations to reach a run rate of at least 1GW of new assets a year during the second half of this decade.
Shares in SSE finished the day marginally up at £16.
Online auctions platform Auction Technology (ATG) has received full antitrust and regulatory clearances for its acquisition of Live Auctioneers, lifting its share price around 0.5% to £13.
The $525 million deal was announced in June and is expected to close soon.
‘Through further building our presence in the large and rapidly growing US arts and antiques market, and adding technology capability and scale, we look forward to continuing to strengthen our partnership with auctioneers in the years ahead,' said CEO John-Paul Savant.
ELSEWHERE ON THE MARKET
Investors were left scratching their heads after computer chip technology developer Alphawave IP (AWE) saw its shares collapse 51% to 180.4p, wiping more than £1 billion off its market valuation despite no official news. Perhaps more detail will emerge over the coming days.
Wealth manager Abrdn (ABDN) rose nearly 2% to 255p after it sold more of its shares in Indian group HDFC Asset Management, for about £268 million.
Abrdn’s remaining 16.22% shareholding in HDFC continued to provide it with the right to nominate a director to the board.
Fashion retailer Quiz (QUIZ:AIM) tumbled 20% to 19.45p, having posted a deeper underlying annual loss for the year through March after sales were pummelled by pandemic lockdowns.
Quiz said it had seen a gradual improvement in sales since the removal of restrictions on large-scale social events, with performance approaching pre-pandemic levels on a like-for-like basis.
Restaurant group Fulham Shore (FUL:AIM), owner of the Franco Manca and The Real Greek chains, lost earlier gains to end flat at 18.25p on announcing that it performed ahead of management's expectations amid 'strong' first-half revenue growth.
Specialist leather group Pittards (PTD:AIM) firmed 11% to 72p after it swung to a full-year profit as sales recover post-lockdowns. Pittards reinstated its interim dividend at 0.5p per share.
Video-games producer Sumo (SUMO:AIM), which recently agreed to be acquired by China's Tencent, dipped 0.4% to 485p, having posted a 33% rise in profit as the pandemic continued to drive demand for home-based leisure pursuits.
