Stocks advanced gingerly in early trading as investors waited for Fed chairman Jerome Powell to testify before the House of Representatives in order to get a better feel for the near-term outlook for US interest rates and liquidity.
At 9am the FTSE 100 index was up 20 points or 0.3% to 7,082 points led by property, industrial and energy stocks, while the FTSE 250 mid-cap index gained 95 points or 0.4% to 22,552 points led by hospitality and other ‘reopening’ stocks.
On the currency markets sterling continued to ease against the dollar, falling below the $1.39 level. Bitcoin tumbled another 8% to $32,500 as traders worried the Chinese authorities were preparing to clamp down further on the crypto-currency.
COMPANY NEWS
Packaging firm DS Smith (SMDS) posted a drop of 37% in pre-tax profits for the year to April on the back of a 1% fall in revenues as demand was heavily impacted by the pandemic and raw material costs ate into margins.
The company said packaging volumes had improved in the second half and it was making market share gains with consumer goods customers in Europe and the US, while pushing through price increases to offset cost pressures. However, continued uncertainty over the outlook sent shares down 1.3% to 427p.
Industrial group Melrose (MRO) announced it had sold the Nortek Air Management business to US firm Madison Industries for $3.625 billion (£2.62 billion) and would return £730 million in cash to shareholders, equivalent to 15 per share.
The firm also reported business was in line with its recent trading update, with ‘some encouraging signs for the aerospace division that the start of a recovery is in sight’. Shares added 1.6% to 161p.
Building materials group Kingspan (KGP) reported that the strong trading seen in the first quarter had continued into the second quarter with the result that first half revenues would be up around 40% to €2.9 billion and trading profits would be up around 60% to €315 million, despite record raw material price rises. Shares climbed 3.3% to €79.50.
Transport group National Express (NEX) revealed that trading in the first half was slightly ahead of management expectations as the firm won new contracts in the UK and US. It also announced a small acquisition in southern Spain to complement its existing business in the region. Shares gained 2% to 283p.
Musical instrument retailer Gear4music (G4M) posted earnings for the year to March above market estimates, with operating profits up 154% to £19.8 million thanks to ‘exceptional’ demand during lockdown.
While the firm still sees profitability or group margins below last year’s record level, trading in the first quarter of this financial year has been stronger than expected so the firm has raised its earnings guidance. Shares advanced 2.3% to 950p.
AIM ROUND-UP
Podcast company Audioboom (BOOM:AIM) reported strong first half sales momentum, with signed advertising bookings already over 99% of its recently raised forecast for the full year.
As a result the firm now sees revenues ‘significantly in excess of market expectations and an increased adjusted Ebitda’. Shares added 0.9% to 890p.
Clinical diagnostic firm Novacyt (NCYT:AIM) posted exceptional growth in revenues and earnings for the year to December, and outlined further growth opportunities both in products and markets.
Sales for the year were up more than 20-fold to £277.2 million while operating profits were £167.4 million against a loss of £1.6 million the previous year.
The news took the focus away from the ongoing dispute with the Department of Health and Social Care over product supplied by the company in the final quarter of last year, and shares climbed 9% to 390p.
Printed circuit manufacturer Trackwise Designs (TWD:AIM) posted a solid increase in revenues and operating earnings for the year to December, but cautioned that some revenues for this year would likely be pushed out to 2022.
The firm said demand remained healthy and put the delay down to the slower pace of customer investment, raw material supplies, the upgrade of its plant and rephasing of production. Shares opened down 16% at 190p before clawing their way back to 209p for a loss of 7.5%.
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