The FTSE 100 remains entrenched in the red at lunchtime on Thursday as investors were spooked by reports that the US and China could release some of their strategic oil reserves.
West Texas Intermediate is off 0.45% while Brent crude fell 0.32% to $80.02 a barrel. These worries saw both BP (BP.) and Royal Dutch Shell (RDSB) among the biggest FTSE 100 fallers, off around 2% a piece at 335.95p and £16.568 respectively, the latter also struck by the threat that it could be hit with an exit tax in the Netherlands ahead of its move to relocating its headquarters to the UK.
At 12.30pm, the benchmark index is about 0.2% down at 7,278.74, although mid-caps are in better shape. The FTSE 250 is trading nearly 0.4% higher at 23,520.62 with M&A, leisure firms and housebuilders seeding optimism.
Investors have now turned their attention to Wall Street’s opening where US stocks are expected to edge higher ahead of more corporate earnings, notably from the retail sector, and weekly jobless claims data that will be closely watched as investors fret over likely Federal Reserve rate hikes in the medium term.
Futures for the Dow Jones Industrials Average were around 0.2% higher, while those for the broader S&P 500 index added 0.3%, and contracts for the tech-laden Nasdaq-100 futures climbed 0.5%.
MAJOR COMPANIES ON THE MOVE
Royal Mail (RMG) topped the FTSE 100 leader board at lunchtime, up more than 6% at 465.6p, after the postal services group said it will return £400 million to shareholders after reporting a jump in profit in first half profits.
For the 26 weeks ended 26 September, pre-tax profit jumped from £17 million to £315 million year-on-year as revenue increased 7.1% to £6.07 billion.
In a show of confidence, Royal Mail plans to return £400 million of capital to shareholders, of which £200 million will be via a share buyback and the balance by way of a special dividend to be paid alongside interim dividend.
‘Looking ahead, GLS continues to deliver good volume and revenue growth, both year on year and against H1 2019-20’, said Royal Mail.
‘Whilst we are seeing upward pressure on costs in all of our markets, we maintain our outlook for the full year of low single digit % revenue growth and [about] 8% operating profit margin.’
Drugs developer GlaxoSmithKline (GSK) is the biggest FTSE 100 loser, down almost 3% at £15.166.
Housebuilders are strong across the board, led by Persimmon’s (PSN) 4% gain at £28, with Taylor Wimpey (TW.), Barratt (BDEV) and Berkeley (BRK) all making 3%-plus gains.
Bunzl (BNZL) improved 0.7% to £28.06 after the distribution and services firm reported the completion of a further two UK acquisitions; Workwear Express is a specialist in personalised workwear and promotional clothing with a strong e-commerce focus with a broad range of customers, while Hydropac is a distributor of insulated packaging solutions.
METRO TANKS AS BUYER WALKS
Elsewhere, Metro Bank (MTRO) crashed by more than18% to 107.9p after potential private equity buyer Carlyle walked away from negotiations, though the board stressed it ‘continues to strongly believe in the standalone strategy and future prospects of Metro Bank’.
Gaming software provider Playtech (PTEC) rallied more than 4% to 771p after confirming media reports that it has received a preliminary approach from JKO Play relating to a possible rival offer the business, thus intensifying the bidding war for the company amid interest from Gopher and Aristrocrat.
JKO Play, which is controlled by Formula One team owner Eddie Jordan, is seeking access to certain due diligence information in order to explore terms on which an offer might be made. Playtech accepted a 680p-a-share bid from Aristocrat last month and has also received a preliminary approach from Gopher Investments.
AROUND THE MARKET
National Grid (NG.) has seen its half-year profits soar as it benefits from a new undersea cable from France delivering renewable electricity.
Shares in the electricity network operator rose 0.2% to 977p as pre-tax profits jump 86% to £1 billion in the six months to 30 September, although this was flattered by the £7.8 billion acquisition of Western Power Distribution.
Waste management company Biffa (BIFF) plunged 14% to 339.5p after revealing hefty impairment charges. This was despite the company resuming its dividend after narrowing first half statutory operating losses as revenue was boosted by ‘strong’ performance in its collections and recycling business.
Information services provider Euromoney Institutional Investor (ERM) added 2% to £10.66 after reporting a rise in annual profit as cost cuts bolstered performance.
Flow control and instrumentation group Rotork (ROR) eased from heavier losses earlier in the day but is still down almost 7% at 346.5p after it said order intake in the four months to October was up a high single digit percentage year-on-year, while also flagging that the negative impact of supply chain disruption is expected to continue.
Doorstep wine delivery firm Naked Wines (WINE:AIM) is sharply lower as first half sales growth slowed versus a tough prior year comparative, boosted by Covid lockdowns.
The direct-to-consumer wine business also downgraded its full year total sales growth guidance to a £340 million to £355 million range, below the previous £355 million to £375 million estimate, with the growth slowdown reflecting lower than anticipated investment in new customers.
That bleak news saw shares in Naked Wines plunge 22% to 528.24p, the day’s biggest AIM loser.
