FTSE 100 falls accelerated through the afternoon session despite a firm start on Wall Street, with the S&P 500 and Nasdaq trading higher. Reports that the US and China could release some of their strategic oil reserves appear to have taken their toll, and despite a recovery in the price of Brent crude, up 0.7% at $80.87 a barrel, both BP (BP.) and Royal Dutch Shell (RDSB) posted near 2% declines to 336.45p and £16.58 respectively.
The latter was also hurt by the lurking threat that it could be hit with an exit tax in the Netherlands ahead of its move to relocating its headquarters to the UK.
At the close, the benchmark index had lost nearly 0.5% at 7,255.96, although mid-caps finished in better shape. The FTSE 250 ended its trading day 0.6% higher at 23,574.62 with M&A, leisure firms and housebuilders providing the push.
Investors have now turned their attention to Wall Street’s opening where US stocks are expected to edge higher ahead of more corporate earnings, notably from the retail sector, and weekly jobless claims data that will be closely watched as investors fret over likely Federal Reserve rate hikes in the medium term.
Bolstering confidence across the pond was data suggesting that the US economy is regaining speed, with unemployment claims falling close to pre-pandemic levels and manufacturing productivity surging.
While the Dow Jones Industrials Average struggled for momentum, down 0.14%, the broader S&P 500 index added 0.3%, and the tech-laden Nasdaq Composite rallied 0.45%.
MAJOR COMPANIES ON THE MOVE
Royal Mail (RMG) topped the FTSE 100 leader board at the end of play, rallying almost 10% to 480.7p, after the postal services group said it will return £400 million to shareholders after reporting a jump in profit in first half profits.
For the 26 weeks ended 26 September, pre-tax profit jumped from £17 million to £315 million year-on-year as revenue increased 7.1% to £6.07 billion.
In a show of confidence, Royal Mail plans to return £400 million of capital to shareholders, of which £200 million will be via a share buyback and the balance by way of a special dividend to be paid alongside interim dividend.
‘Looking ahead, GLS continues to deliver good volume and revenue growth, both year on year and against H1 2019-20’, said Royal Mail.
‘Whilst we are seeing upward pressure on costs in all of our markets, we maintain our outlook for the full year of low single digit % revenue growth and [about] 8% operating profit margin.’
Darktrace (DARK) replaced drugs developer GlaxoSmithKline (GSK) as the biggest FTSE 100 loser, down almost 5% at 524.5p.
Housebuilders are strong across the board, led by Persimmon’s 4.6% gain at £28.14, with Taylor Wimpey (TW.), Barratt (BDEV) and Berkeley (BRK) all making 3%-plus gains.
Bunzl (BNZL) improved 0.6% to £28.04 after the distribution and services firm reported the completion of a further two UK acquisitions; Workwear Express is a specialist in personalised workwear and promotional clothing with a strong e-commerce focus with a broad range of customers, while Hydropac is a distributor of insulated packaging solutions.
METRO TANKS AS BUYER WALKS
Elsewhere, Metro Bank (MTRO) crashed by nearly 20% to 106.4p after potential private equity buyer Carlyle walked away from negotiations, though the board stressed it ‘continues to strongly believe in the standalone strategy and future prospects of Metro Bank’.
Gaming software provider Playtech (PTEC) gained a little less than 4% to 769p after confirming media reports that it has received a preliminary approach from JKO Play relating to a possible rival offer the business, thus intensifying the bidding war for the company amid interest from Gopher and Aristrocrat.
JKO Play, which is controlled by Formula One team owner Eddie Jordan, is seeking access to certain due diligence information in order to explore terms on which an offer might be made. Playtech accepted a 680p-a-share bid from Aristocrat last month and has also received a preliminary approach from Gopher Investments.
AROUND THE MARKET
National Grid (NG.) has seen its half-year profits soar as it benefits from a new undersea cable from France delivering renewable electricity.
Shares in the electricity network operator rose more than a 1% to 986.5p as pre-tax profits jump 86% to £1 billion in the six months to 30 September, although this was flattered by the £7.8 billion acquisition of Western Power Distribution.
Waste management company Biffa (BIFF) plunged 10% to 355p after revealing hefty impairment charges. This was despite the company resuming its dividend after narrowing first half statutory operating losses as revenue was boosted by ‘strong’ performance in its collections and recycling business.
Information services provider Euromoney Institutional Investor (ERM) reversed earlier gains to end the day 1.8% lower at £10.30 despite reporting a rise in annual profit as cost cuts bolstered performance.
Flow control and instrumentation group Rotork (ROR) eased from heavier losses earlier in the day but still fell 7% at 345.2p after it said order intake in the four months to October was up a high single digit percentage year-on-year, while also flagging that the negative impact of supply chain disruption is expected to continue.
Doorstep wine delivery firm Naked Wines (WINE:AIM) is sharply lower as first half sales growth slowed versus a tough prior year comparative, boosted by Covid lockdowns.
The direct-to-consumer wine business also downgraded its full year total sales growth guidance to a £340 million to £355 million range, below the previous £355 million to £375 million estimate, with the growth slowdown reflecting lower than anticipated investment in new customers.
That bleak news saw shares in Naked Wines fall 9% to 613p, no longer the day’s worst AIM performer having recovered from earlier 22% declines.