UK markets make further gains in early trade on Tuesday as investors rally around more declines for the pound and the impact on large overseas earnings for many of the FTSE 100 companies. That comes as energy regulator Ofgem announces a probe into the recent power blackout and National Grid’s (NG.) part in it.
Sterling fell 0.4% against the dollar, taking cable (the nickname given to the pound dollar exchange rate) back under $1.209, and 0.3% against the euro, leaving it at €1.091.
The UK’s FTSE 100 benchmark opened around 25 point to the good, or about 0.35%, at 7,215.01. Other UK indexes are also in positive territory, albeit making only modest gains, the details of which are available here.
WATCHDOG LOOKS FOR OUTAGE ILLUMINATION
Energy network operator National Grid is in the firing line after Ofgem, the UK energy regulator, said it has launched an investigation into a blackout that hit homes, businesses and infrastructure in England and Wales on 9 August. That comes having already received a report from National Grid into the outage.
National Grid says that lighting strikes were partly to blame for the transmission short circuit, with follow up strikes taking two power stations temporarily off the grid.
‘Having now received National Grid ESO’s interim report, we believe there are still areas where we need to use our statutory powers to investigate these outages,’ said Jonathan Brearley executive director of systems and networks, Ofgem.
Ofgem has the power to hand out fines to National Grid if it finds the group culpable of poor management, although investors seem to be taking that in their stride, National Grid shares barely moving on today’s news, dipping a mere 0.3% to 865.2p.
HOMES SOLD AND PROFITS BOTH FALL
First half profits at house builder Persimmon (PSN) have dipped 1.4% to £509.3m while it sold fewer new homes in the period compared to a year ago. The FTSE 100 housebuilder said 7,584 new homes were sold, compared with 8,072 a year earlier.
But investors seem to like the renewed push on customer service that Persimmon boss Dave Jenkinson talked about in today’s results in light of recent quality criticism. Jenkinson took over as chief executive when Jeff Fairburn was forced out in a row over his £75m pay award.
Persimmon shares rise 2% to £18.985, although that’s a long way shy of the £28.60 levels of June 2018.
The world's biggest mining company BHP (BHP) has announced a rise in underlying profit to $9.1bn (£7.5bn) for the year to 30 June, up from a previous $8.9bn.
BHP is heavily exposed to global trade and China’s economic growth in particular, and the current trade tiff with the US is doing nothing for confidence.
BHP's chief executive Andrew Mackenzie admits that demand ‘has softened a bit but to some extent the stimulus [China] put into their economy to counteract some of the potential and real impacts of the trade dispute with the United States has actually created increased demand for our products,’ he said.
Investors mark shares in the group a modest 1% to £17.626.
ENGINEERING ACQUISITION
UK engineering business IMI (IMI) said it had struck a deal to acquire speciality valve manufacturer PBM for $85m.
US-based PBM makes high-quality industrial valves and flow control products and it will be integrated into IMI's Critical Engineering division, the company said.
In the year to December 2018, PBM generated revenues of $35.6m (£29.4m), adjusted earnings of $6.8m (£5.6m).
The deal is seen as a sensible deal for IMI and is supported by wider markets, nudging the group’s shares close on 2% higher to 949.8p.
Pharmaceuticals company AstraZeneca (AZN) firmed 1.6% to £73.95 after it reported positive trial results for a diabetes drug.
Digital transformation business Kin & Carta (KCT) said it expected profit before tax to be ‘marginally lower’ than market expectations sending the share price spiralling down 13% to 82.4p.
The company plans to increase investment in its transformation agenda and continue to reposition the communications and strategy pillars for the digital transformation market. That will involve upping its previous £2m investment budget to £3m.
Subprime lender Non-Standard Finance (NSF) gained 0.4% to 33.75p, despite it booking a deeper first half loss, partly owing to costs associated with its failed takeover bid for rival Provident Financial.
The company also posted a rise in underlying revenue and earnings, while lifting its dividend 17%.
Disease and allergy testing company Omega Diagnostics (ODX:AIM) rallied 5.9% to 9p after it received its first purchase order for an HIV testing kit from its partner company in Zimbabwe.
