After their worst session in nearly three weeks yesterday, UK stocks rallied on Wednesday with energy and mining stocks leading the gains. By 8.30am the FTSE 100 index of leading shares was up 34 points or 0.5% at 7,136 points.
Elsewhere, investors seem to be questioning the strength of the global recovery with ‘safe haven’ trades such as US government bonds and the Japanese Yen attracting buyers.
US 10-year Treasury bond yields hit their lowest level since February yesterday (yields fall as prices rise) after economic data suggested the US recovery may have run out of steam.
Meanwhile, investors are fleeing once-hot Chinese technology stocks as they face tighter scrutiny of their businesses by Beijing. Overnight the CSI Global China Internet Index slumped to its lowest level since October, after surging to an all-time high in February.
Oil prices dropped sharply after signs of progress in OPEC+ talks to increase production, with Brent crude futures falling from $77 earlier in the week to $73.50. Gold on the other hand gained 0.3% to $1,802 as inflation concerns continue to grow.
COMPANY NEWS
Oil giant Royal Dutch Shell (RDSB) said it was moving to the next phase of its capital allocation programme and would increase total shareholder pay-outs to between 20% and 30% of operating cash flow, sending shares up 3% to £14.60 and topping the list of FTSE gainers.
The firm also published updated second quarter guidance with results from the gas business seen ‘significantly below average’ and similar to the first quarter, while its downstream oil business are also seen in line with the first quarter despite a jump in refining margins.
House builder Redrow (RDW) posted an update on full year trading and raised its revenue guidance to £1.94 billion thanks to strong demand for new housing.
Weekly reservations per outlet were 0.7 compared with 0.67 the previous year and revenue per outlet was £288,000 against £259,000, even with a share drop in the use of Help to Buy. Shares climbed 5% to 663p.
Rival house builder Vistry (VTY) posted an update on first half trading, which it said was ‘significantly ahead’ of its initial expectations. Forward sales of £2.7 billion, equal to 93% of its full year budget, were much higher than in previous years, while first half completions were 3,126 against 1,235 last year. Shares added 1% to £12.24.
MID-CAP ROUND-UP
Staffing firm PageGroup (PAGE) issued a second quarter trading update showing a 94% increase in net fee income on a constant currency basis with record quarterly fees in four of its five ‘large high potential markets’.
The firm said it now expects full year operating profits to be between £125 million and £135 million compared with its previous guidance of £90 million to £100 million. Shares gained 5.2% to 605p.
Rival recruitment firm Robert Walters (RWA) also issued a second quarter trading update showing a strong recovery in net fee income and said profits for the full year were likely to be ‘significantly ahead’ of its previous expectations.
Revenues for the three months to June were up 31% on a constant currency basis driven by a 48% rebound in the Asia Pacific region and a 26% recovery in Europe. Shares added 4% to 756p.
Logistics firm Wincanton (WIN) reported that the strong revenue growth seen in the second half to March had continued into the first quarter of its new financial year ‘with sustained growth and an attractive pipeline of opportunities in each of the group's four sectors’.
As a result, profits are expected to be ‘up significantly’ on last year’s first quarter the firm said. Shares dropped 5% to 445p, although they jumped nearly 7% yesterday ahead of today’s announcement.
Van hire and legal services group Redde Northgate (REDD) posted better than expected results for the year to April with revenues up 50% to £880 million thanks to the inclusion of Redde and a stronger van rental market.
As well as a better underlying performance from the business, cost savings from the merger were greater than expected and arrived earlier than expected at lower cost. Shares added 2.5% to 411p.
Shares in payments company Wise (WISE), formerly known as Transferwise, were set to begin trading today after the firm listed directly on the stock exchange rather than following the usual initial public offering route.
The listing is seen as a test of the UK’s ability to attract new fintech or financial technology firms to the market.
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