UK stocks advanced as the first half reporting season continued to show companies meeting or beating expectations in general.
By 8.30am the benchmark FTSE 100 index was up 24 points or 0.3% to 7,185 points, not quite an intraday high but very close, driven by gains in financial and industrial stocks.
The FTSE 250 mid-cap index hit yet another record high, albeit with a small gain of 22 points to 23,594 points, also lifted by industrial stocks.
Sterling made little headway against the dollar at $1.383 as the US currency continued to strengthen against the euro and the yen after last week’s impressive US jobs data.
US inflation data later today could set the scene for further dollar strength if consumer prices are above expectations. Generally, a strong dollar/weak pound is good for UK exporters.
Brent crude oil rose 2.5% to $70.50 per barrel, lifted by US crude prices which gained on signs of rising fuel demand. Also noteworthy is the surge in European natural gas prices, which hit a new record on supply constraints.
FINANCIAL NEWS
Car and house insurer Admiral Group (ADM) posted a 76% increase in first half pre-tax earnings to $482.2 million thanks to increased policy numbers, lower claims frequency due to the pandemic and a large release of prior-year reserves.
‘It’s been a half year of good execution for Admiral. By and large, we’ve done the right things more often and a bit earlier than most’, said chief executive Milena Mondini. Shares rose 2.2% to £35.24
Insurance and pensions group Phoenix (PHNX) reported a 46% increase in first half operating profit to £527 million thanks to several acquisitions including the Standard Life brand.
Cash generation was £872 million, more than double last year’s level, and the firm said it was on track to hit the top end of its target range of £1.5 billion to £1.6 billion of cash by the year-end. Shares drifted off 1.7% to 688p.
M&A UPDATE
Cyber security firm Avast (AVST) announced that it had reached agreement with NortonLifeLock on a sweetened bid for the company. Under the terms of the new deal, for each Avast share investors will receive $7,61 in cash and 0.03 of a new share in NortonLifeLock.
The revised deal raises the cash component to 90% and represents close to a 21% premium to the Avast share price on 14 July, before the initial approach. Shares drifted up 3% to 585p.
Shares in Vectura (VEC) traded sideways at 164p after bidder Carlyle said it wouldn’t increase its offer of 155p per share for the company. That means there will be no auction, and Philip Morris International has until the close of business on 12 August to announce a revised offer.
OTHER NEWS
Thermal energy specialist Spirax-Sarco (SPX) registered a 42% increase in first half operating profit to £162.9 million on a like-for-like basis, although currency headwinds reduced the reported growth rate to 37%.
The firm saw strong growth across its business due a recovery in global industrial output, as well as strong vaccine-demand for its Watson-Marlow pump and fluid technology products. Shares were the top performer in the FTSE 100, gaining 2.7% to £155.40.
Similarly, infrastructure group Hill & Smith (HILS) posted a 73% increase in first half operating profits to £39.2 million, which after currency headwinds was reduced to a 59% increase on a reported basis.
The firm said it saw a ‘good recovery in trading across all divisions’, with margins returning to its target range, while it was managing increased raw material and labour costs. Shares climbed 2% to £16.95.
Shares in online food delivery firm Deliveroo (ROO) edged 0.3% higher to 364p after the company reported the value of gross transactions more than doubled in the first half to £3.38 billion, although there was a marked slowdown in the second quarter as hospitality venues reopened.
Revenues rose 82% to £922.5 million thanks to a rise in monthly active consumers and broader take-up by food merchants. The firm said its UK expansion was ahead of plan with 72% population coverage at end-June against an initial target of 67% by year-end.
Pershing Square (PSH) confirmed it had bought a 7.1% stake in Universal Music Group from French media conglomerate Vivendi for €2.4 billion ($2.8 billion) in cash.
The company has an option to buy a further 2.9% of the shares at the same price by 9 September, which it says it intends to exercise, implying a further pay-out of €940 million ($1.1 billion). Shares were static at £25.25.
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