UK investors could be in for another bumpy day of trading on Thursday after a mixed session overnight in the US. The FTSE 100 index opens on the back foot, losing around 45 points, or 0.6%, in early deals to trade at 7,235.08.
There’s more bad news from embattled TalkTalk (TALK) as the broadband and calls supplier slashes its dividend and goes on the hunt for new funding via a £200m rights issue. The dividend has been cut from 7.5p to 2.5p.
That disastrous news comes alongside a third quarter trading statement which makes upbeat sounds, but is certainly not being treated as such by the market. The company hails a ‘positive’ outlook and flags ‘strong customer growth,’ but there is also hints of more massive cost cuts as the business tries to align its operating expenses with the very challenging market conditions.
TalkTalk shares are getting a huge kicking from investors in early deals on Thursday, the stock slumping 14% to 102.8p. Today’s blow should not really come as a surprise; Shares flagged the increasing nervousness of investors over the firm’s future prospects at the end of January.
CATERER HEADS FOOTSIE PERFORMERS
Compass (CPG), the world’s biggest catering firm, leads the FTSE 100 leader board on Thursday, the shares rallying more than 6% at £15.235, after saying its full year performance will top analyst projections.
The £2.8bn company says organic revenue growth has been helped by continued strength in North America and a better-than-expected performance in Europe.
Also a strong performer today is roadside recovery firm and insurer AA (AA.) as it now expects full year core profit of £390m to £395m. That’s roughly in line with past guidance but what is really getting investors excited is hope that an update on its strategy review, due on 21 February, could lead to improved growth prospects.
Shares in AA jump more than 8% to 144.5p, valuing the FTSE 250 business at £878m.
MARKET NOT IN HOLIDAY MOOD
Holidays firm Thomas Cook (TCG) says it has had an ‘encouraging start’ to the new year despite running up hefty £42m of losses in the first quarter. But this is a highly seasonal business so it is the months ahead rather than those past that really matter.
The company also states that it is on track to meet forecasts for its current financial year due to growth in its airline business and as it adds more holidays to Egypt and Turkey, holiday destinations previously hit by social unrest.
But already jittery investors are in unforgiving mood, marking the stock nearly 3% lower at 122p.
FTSE 250 cyber security firm Sophos (SOPH) feels the heavy hand of investors on Thursday as its latest trading update fails to live up to inflated expectations.
The shares, which have doubled in the past year, slump 15% to 526.5p, another demonstration of what can happen when a stock is priced for perfection.
UK HOMES WORRIES
UK housebuilder Bellway (BWY) expects revenues for the first half of its financial year to rise 14%, after it sold more homes at higher prices. Completions rose 6.3% in the first half to 31 January while average selling prices increased 7.8% to a record £276,000.
Yet the share price barely moves today at £33.18, presumably due to the latest RICS report, which points to a rather subdued overall UK housing market.
Artificial hip and knee maker Smith & Nephew (SN.) scrapes into the bottom of its guidance range for 2017, with a 3% rise in revenue to $4.77bn and a 20 basis point increase in its trading margin, resulting in profit of $1.05 billion.
The shares dip 1.5% to £12.27.
DEBT DEAL FOR DIAMOND DIGGER?
African miner Petra Diamonds (PDL) is likely to strike a deal with its lenders that could include a waiver or a reset of its debt covenants within the next month, its chief executive Johan Dippenaar has said, according to reports.
The shares dip around 1% on Thursday to 61.55p, although this follows a share price hammering dealt out to the company at the end of January.
FTSE 100 software company Sage (SGE) is among today’s bigger blue-chip fallers, although that’s because the stock is now trading ex-dividend, when new investors will no longer have the right to the next shareholder payout.
