UK shares continued their strong recovery run at lunchtime on Monday as a raft of positive trading updates and raised guidance lifted investor spirits and share prices.
The benchmark FTSE 100 romped 1.8% higher to 5,905.32 points thanks to gains in healthcare and retail stocks. The sell-off in the US at the end of last week, which wiped 4.3% off the S&P 500 index and 6.4% off the Nasdaq 100, stayed on hold with markets across the pond closed on Monday for the annual Labour Day holiday, although futures were pointing lower again.
The pound dipped on the foreign exchange markets as traders reacted to a threat from the prime minister to re-write key aspects of the Brexit withdrawal agreement as the UK and the EU prepare for the eighth round of trade talks.
Oil futures slipped as Saudi Arabia cut prices to Asian markets in an effort to stimulate demand, while gold edged higher as the dollar continued to fall after weak jobs data on Friday suggested the US economic recovery is slowing down.
BETTER THAN FORECAST
In company news, Primark owner AB Foods (ABF) issued an upbeat trading update for the full year to 12 September, forecasting ‘a very strong increase’ in operating profits for it sugar, grocery, agriculture and ingredients businesses after fourth-quarter trading exceeded expectations.
Fourth-quarter trading was also strong for the Primark fashion business, with the latest four-week period hitting a record for UK value and volumes. Primark operating profits are now expected to be ‘at least at the top end’ of the firm’s £300-350m range of guidance. Shares gained 1.5% to £20.58.
Specialist media platform Future (FUTR) also posted a positive full year trading update, with the Covid-driven shift towards digital media leading the firm to upgrade its earnings forecasts.
Strong growth in unique visitors to its UK and US sites combined with a better than expected performance of TI Media mean full year operating profits are now expected to be ‘materially ahead of current market expectations’ of £78 million to £83 million. Shares leapt 14.5% to £16.65.
POSITIVE OUTLOOK
Veterinary drug firm Dechra Pharmaceuticals (DPH) delivered a strong set of full year results to June with revenues up 6.8% to £515 million, driven by steady growth in companion animal products and a sharp acceleration in food-producing animal products thanks to its Brazilian operation.
Trading since the start of July has been ‘encouraging’ and the firm has raised the final dividend by 8.5% to 34.29p per share in a sign of confidence in its growth prospects. Shares jumped 10% to £33.95.
Precious metals miner Hochschild (HOC) issued revised full year guidance on output and costs, lowering its production forecast due to operational stoppages while raising its cost estimates due to stoppages, higher labour expenses and work on its flagship Inmaculada site.
On the positive side the Inmaculada operation is now running at full capacity and the firm expects to deliver ‘a solid second half of production with strong cashflow generation.’ Shares rose 2% to 237p.
Power utility National Grid (NG.) firmed 2.8% to 857p, despite having submitted a critical response to UK regulators' plans for the sector, describing them as 'unacceptable', partly because they involved a 'low allowed baseline return'.
SMALLCAP WRAP
Consumer goods group UP Global Sourcing (UPGS:AIM), also known as Ultimate Products, rallied 8.2% to 113.35p as it reinstated its interim dividend, even as its underlying profit slipped 2.7% in the first half.
Ultimate Products said it was reinstating its suspended 1.16p per share interim dividend, which would now be payable on 9 October.
Maritime surveillance and management system provider SRT Marine Systems (SRT:AIM) sank 13% to 36p, having swung to a full-year loss after sales slipped and it recorded an impairment charge on a Middle Eastern project.
Out-of-hospital services provider Totally (TLY:AIM) slumped 12% to 17.42p after it warned that revenue wouldn't grow as much as before due to the pandemic's impact on elective procedures.
