UK stocks opened higher on Tuesday as unemployment fell and investors continued to await interest-rate decisions due later in the week from a host of central banks. The UK jobless rate fell to 4.2%, down from 4.3% previously, with the claimant count falling by a better-than-expected 49,700.
After falling back around 60 points on Monday, the FTSE 100 has recovered some of the lost ground in early trading. At 9.20am, benchmark FTSE 100 is up 0.62% at 7276.14.
Mid-caps made similar gains with the FTSE 250 0.6% higher at 22,797.23.
Mining and banking stocks gave the market much of its momentum thanks to the continuing strength in metal prices, lifting BHP (BHP) 2.35%, with Rio Tinto (RIO) and Antofagasta (ANTO) also on the rise.
Banks have taken comfort from a positive result from the latest Bank of England stress tests. The UK’s central bank found that even if unemployment rose to 12% and house prices crashed by 33%, UK banks’ capital would still be above dangerous levels, even allowing for Omicron outbreak.
That news helped Lloyds (LLOY) post 1.5% gains while NatWest (NWG) and Barclays (BARC) rose around 1.2%.
MAJOR MOVERS ON THE MARKET
Pest control firm Rentokil Initial (RTO) has taken a major step to strengthen its pest control business with the acquisition of US peer Terminix in a $6.7 billion cash and shares deal.
The acquisition will make Rentokil the pest control leader in both the US and rest of the world, it said in a statement, with a combined 2020 turnover of $5.7 billion (roughly £4.3 billion) and underlying profits of $1.2 billion.
‘This is a win-win-win for colleagues, customers and shareholders,’ said Rentokil’s chief executive Andy Ranson.
UK telco BT (BT.A) led the FTSE 100 loser board, down 5% at 166.15p after hopes of an imminent bid from France’s Altice were dashed.
Altice owner Patrick Drahi was free to bid from last weekend, but at the same time as announcing an increased BT stake of 18% today, he ruled out making an offer unless a third party stepped in.
Topping the FTSE 100 leader board on Tuesday is robotic grocery and logistics group Ocado (OCDO). Shares in the business rose 5% to £17.265 after announcing fourth-quarter revenue at its retail joint venture with Marks & Spencer (MKS) up 32% on 2019, even if its slipped 3.9% on 2020’s lockdown-boosted figure.
Ocado said fourth-quarter trends reflected strong momentum in underlying demand, while forecasting its ‘best-ever Christmas ahead.’ Marks & Spencer added 0.3% to 234.3p.
Defence company Chemring (CHG) dropped 2% to 283.4p even as it reported a rise in annual profit, buoyed by stronger margins that had offset a 2% slip in revenue.
Chemring's underlying operating margin expanded to 14.6% from 13.6%, thanks to growth in the higher-margin sensors and information segment and continued cost cutting.
ELSEWHERE ON THE MARKET
Lifestyle brand Joules (JOUL:AIM) tumbled 26% to 144p after it warned on profits for both the first half and the full year, as supply-chain challenges overshadow a recovery in sales.
Joules was now expecting first-half pre-tax profit before adjusted items of £2 million to £2.5 million, down from £3.7 million year-on-year, with a full-year figure of £9 million to £12 million.
Builders' merchant Travis Perkins (TPK) added 1% to £15.105 on announcing that it had extended an initial £100 million share buy-back by a further £70 million.
Travis Perkins also said it would update shareholders about capital returns at its annual results briefing on 1 March 2022.
Brake disc manufacturer Surface Transforms (SCE:AIM) skidded 13% lower to 45.64p having warned that its annual revenue would fall significantly short of expectations due to delays in the development of a production facility.
Revenue for the year through December was now expected to be below £3 million, the shortfall mainly due to delays in final commissioning of upscaled production capacity at Knowsley.
Oil company SDX Energy (SDX:AIM) slumped 15% to 7p after a drilling campaign in Morocco had been delayed due to operational issues and Covid-19 border restrictions.
The two-well campaign initially expected to finish at the end of December was not now expected to complete in the middle of the 2022 first quarter, SDX said.
