UK stocks were slightly weaker on Monday as investors eyed Wednesday's inflation report and expectations grew of a rise in official interest rates at next month's Bank of England meeting.
At midday the FTSE 100 index was 14 points or 0.2% lower at 7,335 points with mining stocks lagging in the wake of the COP26 climate conference.
Overnight trading in Asia was mixed with China’s SE Composite up 0.6% after retail sales and industrial output beat expectations, while Japan’s Nikkei 225 index was down 0.2%.
Brent crude prices were down 0.7% to $91.12 per barrel while gold was down 0.3% to $1,859 an ounce.
CORPORATE NEWS
Shares in oil giant Royal Dutch Shell (RDSB) climbed 1.6% to £16.66 after the company said it planned to simplify its share structure and align its tax residency with its country of incorporation in the UK.
The simplification proposal, to be voted on at Shell’s annual general meeting, would see the company establish a single line of shares to eliminate the complexity of its A/B share structure.
INCREASED GUIDANCE
Outsourcing group Serco (SRP) gained 4% to 136p after the company upped guidance following stronger than expected trading in the last few months. Serco increased 2021 revenue expectations by 2.3% to around £4.4 billion and underlying trading profit by 12.5% to ‘not less than’ £225 million.
The company also increased guidance for organic revenues to be around 10% from prior expectations of 6%. The strength of trading was driven by higher volumes of work in the UK and Australia related to Covid-19 support governments.
STRONG ROSTER
Shares in global cinema operator Cineworld (CINE) were up 8% to 68p after the firm said trading in October had reached 90% of pre-pandemic levels, with the UK and Ireland trading at 127% of 2019 while the US (80%) and the rest of the world (84%) lagged.
A better roster of film releases helped drive the strong recovery, including Black Widow, Shang-Chi and the Legend of the Ten Rings, Venom, No Time to Die and Dune, while the company noted several more release to come including Ghostbusters: Afterlife, Encanto, Spider-Man: No Way Home, The King's Man, Sing 2 and The Matrix Resurrections.
Strong trading and good cost resulted in positive cash flow in October, which the company said was an important milestone.
IT services provider Kainos (KNOS) said first half revenues increased by 33% to £142.3 million while pre-tax profits were only just ahead of last year at £24.8 million.
The company said it continued to deliver a strong performance reflecting ‘robust’ market demand for its services and raised its interim dividend 11% to 7.1p as a sign it was confident in the outlook.
However, investors marked the stock down 8% to £18.87 on the lack of concrete financial guidance for the full year.
SHARE ISSUE
Logistics property investor Urban Logistics (SHED) cheapened 1.3% to 175p after it launched a £200 million share issue at 170p per shares to spend on its acquisitions pipeline.
The company said its investment manager had identified a further pipeline of high-quality, last-mile logistics assets worth in excess of £400 million.
ADDING CAPACITY
Low cost airline Wizz Air (WIZZ) said it had agreed to acquire 102 aircraft from Airbus, with the bulk to be delivered between 2025 and 2027.
The order for Airbus A321 aircraft comprised 75 Airbus A321neo and 27 Airbus A321XLR models.
Wizz Air added that under certain circumstances it may acquire a further 19 A321neo aircraft.
Airbus has also granted Wizz Air 75 A321neo purchase rights for deliveries in 2028-29, to be converted into a firm order by the end of 2022. Investors seemed unimpressed and marked the shares down 1.5% to £47.
Engineering group IMI (IMI) announced the proposed acquisition of Adaptas Solutions in a deal worth $271 million which extends the company’s precision engineering product portfolio further into life sciences.
IMI said the acquisition was in-line with its strategy to develop into sustainable, profitable adjacencies. The shares dipped 0.1% to £17.90.7
Shares in CMC Markets (CMC) jumped 7 to 277p after the online trading platform said it is mulling the merits of separating its leveraged and non-leveraged businesses in order to unlock shareholder value.
CMC expects to start its review before year end and complete it by June 2022 and will update the market in due course.
The review comes as the group said it now had two ‘strong’ underlying businesses, leveraged and non-leveraged, ahead the launch of its new UK investment D2C and B2B platforms, and the upcoming end of its B2B white label deal with ANZ.
