Major UK stocks dipped into the red amid some mixed data out today and the announcement that the Bank of England monetary policy committee left interest rates unchanged as widely predicted, with no new dissenters among the panel.
At 12.30pm, the benchmark FTSE 100 fell back into the red having spent the morning flip-flopping modestly above and below today’s starting point, easing around 0.2% to 7,107.05.
The more domestically focused FTSE 250 was in better health, moving 0.3% higher to 23,414.10.
MPC AS YOU WERE
The rate-setting monetary policy committee voted by a majority of 7-1 for the Bank to keep the stock of government bond purchases at £875 billion, with no new members calling for a reduction.
It voted unanimously to keep bank rate at 0.1%, and to keep the stock of corporate bonds at £20 billion.
July’s construction PMI survey came in at 58.7, which is still above the 50 level that indicates an industry in growth but a significant fall from the previous month’s 24-year high of 66.3, seemingly backing the Bank’s view that inflationary pressure will be temporary.
Earlier, news of the UK’s easing of travel restrictions for some destinations, including France, which will see less people being forced to quarantine on their return to the UK, was welcomed by travel firms and airlines, although car sales were reported to have lost momentum in July.
Private new car registrations of 59,800 was down on last year and the year before, with a combination of factory shutdowns caused by key component shortages and staff absences brought about by the ‘pingdemic’ largely believed to be behind the weakness.
Private registrations were 14% below their average level in the four Julys prior to the pandemic, worse than June’s equivalent 9.8% shortfall.
MOVING ON THE STOCK MARKET
In corporate news, mining giant Glencore (GLEN) reversed earlier modest gains to drift 1.7% lower to 323.7p after unveiling a plan to return a further $1.18 billion to shareholders via dividend and share buybacks following a jump in core earnings in the first half of the year thanks to rising commodity prices.
Advertising agency WPP (WPP) improved 2.7% to 957.4p after it posted strong first half results with like-for-like sales growth of 16.1%, raised full year guidance with the global recovery gathering pace and announced a £350 million share buyback for the second half.
WPP now expects annual like-for-like revenue growth of 9-to-10%, up from previous guidance for mid-single digit growth, with headline operating margin towards the upper end of the range of 13.5%-to-14%.
Aero-engineer Rolls-Royce (RR.) lead the FTSE 100 leaderboard with a 3.4% rally to 108.12p after returning to profit for the first six months of 2021. The company swung from a £1.6 million loss to an underlying operating profit of £307 million, thanks largely by a good performance in its defence business and a recovery in order intake within the power systems division.
CEO Warren East said: ‘The benefits of our fundamental restructuring programme in civil aerospace are evident in our reduced cash outflow and improved operational efficiency. This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound.’
HIGH STREETS & RETAIL PARKS
In the retail sector, Sports Direct owner Frasers (FRAS) dipped a penny to 614p on the news Mike Ashley is stepping down as CEO, with his future son-in-law Michael Murray to assume the role in May 2022.
This news somewhat overshadowed robust full year results from the Flannels-to-House of Fraser owner, with underlying EBITDA up 29% to £391 million despite revenue falling 8.4% as UK stores were shuttered for around six months due to Covid.
While Frasers’ UK stores have reopened ‘above expectations’ with the online business continuing to ‘significantly outperform pre-Covid-19 periods’, the retailer refrained from giving guidance for the current financial year due to ‘a high risk of future Covid-19 pandemic restrictions, likely to be over this winter and maybe beyond’.
Furniture and floorings seller ScS (SCS) soared after it reported a strong performance since reopening and upgraded expectations for full year 2021 and 2022.
Shares in the sofas seller had jumped more than 8% by lunchtime to 313.8p, reversing a sharp sell-off during the past months and a bit.
ELSEWHERE ON THE MARKET
Elsewhere, shopping centre owner Hammerson (HMSO) slid 1.8% lower to 37p despite narrowing half-yearly losses amid improved performance in its property portfolio.
Savills’ (SVS) share price surged 4.5% to £12.12 as it reported an 18% rise in revenue for the first half of 2021, up £141.2 million at £932.6 million versus the same period a year earlier.
Mining company Centamin (CEY) fell 0.3% to 106p as it reported a fall in profit as revenue was hurt by a decline in gold.
