UK stocks finished the month flat despite a strong corporate earnings season as concerns over Chinese regulation of technology stocks and disappointing US results weighed on sentiment.
Overnight, Asian stocks sank as fears re-surfaced that Beijing could extend its intervention to more parts of the Chinese economy, while in the US shares in e-commerce giant Amazon.com fell 7% after the company missed quarterly sales forecasts for the first time since 2018.
The FTSE 100 index of leading shares closed down 46 points or 0.65% at 7,032 points, ending the week and the month almost exactly where it finished in June.
LARGE-CAP ROUND UP
Multinational publishing and education company Pearson (PSON) was the top FTSE 100 performer, rallying 3.5% to 874p after it revealed a 17% jump in underlying revenue for the first half to £1.6 billion. Adjusted operating profit climbed to £127 million, following a £23 million loss last year.
The company said it expected full year adjusted pre-tax profit to be in line with market expectations. The company declared an interim dividend of 6.3p per share.
NatWest Group (NWG) reported first half pre-tax profit of £2.5 billion, compared to an operating loss before tax of £770 million during the same period last year.
Income across its UK and Royal Bank of Scotland International retail and commercial businesses dropped 3.3%, reflecting a lower yield curve and subdued transactional activity.
The board proposed an interim dividend of 3p per share. The shares dipped 2.5% to 200p.
Assurance and product testing group Intertek (ITRK) was the worst performer in the FTSE 100, sinking 7.1% to £52.05 after it said first half pre-tax profit climbed by 23% to £186.3 million while revenue fell 1% to £1.32 billion.
The company recommended an interim dividend of 34.2p per share, which is in-line with the prior year.
British airways owner International Consolidated Airlines (IAG) was the second-worst performer, down 6.4% at 170p after it said first half pre-tax losses narrowed to €2.34 billion from €4.21 billion year-on-year, while revenue fell to 58.2% €2.21 billion.
Second quarter passenger capacity was 21.9% of 2019 levels, but is expected to rise to 45% in the third quarter.
MID-CAP ROUND-UP
Shares in defence company Babcock (BAB) tumbled 13% to 266p after it unveiled a turnaround plan to improve performance after reporting wider annual losses amid a £2 billion impairment.
For year ended 30 June, pre-tax losses widened to £1.72 billion from £88.9 million year-on-year as revenue fell 3% to £4.18 billion.
Impairments and charges of £2 billion were driven mainly by write-down of goodwill and acquired intangibles. The restructuring plan aims to deliver annualised savings of about £40 million.
Engineering firm IMI (IMI) upgraded its outlook on the annual performance after reporting ‘strong’ results in the first half of the year.
Based on the strong first half results and current market conditions the company said it now expect 2021 full year adjusted EPS to be in the range of 85p to 90p.
The company recommended a 5.3% increase in the 2021 interim dividend of 7.9p per share. The shares were flat at £17.43.
Shares in medical products company ConvaTec (CTEC) fell 6% to 245p after it said second-half performance would be back-end weighted amid tougher comparison and the ongoing Covid-19 impact after reporting a decline in first half profit.
For the six months ended 30 June 2021, pre-tax profit fell to $112.1 million from $181 million, while revenue increased to $1.01 billion from $908 million. The company said it expected full year organic growth of between 3.5%-to-5%.
Cineworld (CINE) said it had secured $200 million of incremental loans maturing in May 2024 from a group of its existing lenders, as the group looked to take advantage of pent-up demand.
The company also agreed covenant amendments on certain of its existing debt facilities, including reducing the minimum liquidity requirement and relaxing limitations on the use of cash.
The boost to liquidity comes as the company reported improving performance since it reopened its cinemas in April. The shares fell 3% to 64.8p.
