UK shares opened on the front foot on Thursday in line with other global equity markets after the US Federal Reserve presented a dovish message to investors.
Fed chair Jerome Powell said the central bank would start to taper back its asset purchases as signalled but added it was nowhere near the point of raising interest rates. US markets rallied in response and overnight trading in Asia followed suit.
China’s Shanghai Composite and Japan’s Nikkei 225 both gained around 1%. The pound was steady against the US dollar at $1.36 ahead of the meeting of the BOE (Bank of England) where it will give an update on policy.
At 9am the FTSE 100 index of leading shares was 0.35% higher at 7,273 points.
COMPANY NEWS
Food retailer Sainsbury’s (SBRY) said first half revenues to 18 September excluding VAT grew 5.3% to £15.72 billion while pre-tax profit was up 23% to £371 million.
Like-for-like grocery sales grew 0.3% excluding fuel and 6.3% including fuel with year-on-year fuel sales surging 62.7%. The company said it expects consumer behaviour to normalise in the second half and guided for underlying pre-tax profit of at least £660 million.
The company is targeting to reduce net debt to reduce by at least £950 million by March 2023, generating average retail free cash flow of at least £500 million a year over the next three years. The shares dropped 3% to 280.2p.
Shares in telecommunications company BT (BT.) gained 3.5% to 147.1p, sending them to the top of the FTSE 100 leader board after the company delivered cast savings ahead of its target date.
However, first half pre-tax profit fell 5% to £1 billion as revenues dropped 3% to £10.3 billion.
The fall in revenue was driven by a decline in its enterprise and global, and flat growth in its consumer business.
An interim dividend of 2.31p per share was declared and the company confirmed its financial outlook for the 2022 and 2023.
By the end of the decade the BT is targeting to generate at least an extra £1.5 billion of normalised free cash flow compared to FY22.
JD Sports Fashion (JD) said the latest CMA (Competition and Markets Authority) announcement regarding its acquisition of Footasylum ‘defied logic’ given that it agrees with the company’s assessment on two important grounds.
The two areas of agreement are that the main competition is now from direct to consumer operations of international firms and not Footasylum and secondly, the merger there will not result in a ‘substantial’ lessening of competition.
However, the CMA now required JD Sports to unwind the acquisition of Footasylum, which closed in May 2019. The shares gained 1.1% to £10.96.
LOWER END OF GUIDANCE
Shares in medical products company Smith & Nephew (SN.) dropped 1% to “12.80 after the company said it expected to deliver full-year results at the bottom end of the range.
For 2021, the underlying revenue growth guided range was 10.0%- to-13.0%, and trading profit margin guided range was 18.0%-to-19.0%.
Third quarter revenues grew 5.5% to $1.26 billion driven by growth in its sports medicine & ENT (ear, nose, and throat) business of 8.3% and advanced wound management revenue of 12.1% offsetting a 0.7% decline in its orthopaedics business.
TASTY TREAT
Shares in food and beverage ingredients supplier Tate & Lyle (TATE) surged 8% higher to 702.4p after reporting strong first half growth with revenues up 19% and pre-tax profit up 20%.
The company said the transaction to create two focused businesses is on track for completion in Q1 of 2022 calendar year.
Tate increased the interim dividend by 2.3% to 9p per share.
Low-cost Hungarian based airline Wizz Air (WIZZ) said first half revenues increased by 86.8% to €880.4 million, as it swung back to a pre-profit of €410.8 million compared with a loss of €71.3 million.
Looking ahead, the company said it anticipated an operating loss in Q3 of around €200 million. The shares inched 0.1% higher to $48.18.
Shares in luxury car making Aston Martin Lagonda Global (AML) revved 1.6% higher to £17.80 after revenues jumped 173% to £736.4 million in the first nine months to 30 September.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) surged to £72.3 million compared with a loss of £117.6 million. The company reiterated its 2021 guidance and said it was making excellent progress on its transformation plan.
