UK shares were volatile on Wednesday, moving significantly higher initially before falling back into the red after the release of better than expected, but still bad, second quarter gross domestic product (GDP) figures.
Before trading began, the blue-chip FTSE 100 index was expected to fall as investors struggled to digest last night’s messy US presidential debate between Donald Trump and Joe Biden, which gave little guidance for markets.
The UK’s leading basket of stocks actually rose almost half a percent initially, although by noon the FTSE 100 was slightly lower, off 0.03% at 5,895.69 as the latest data from the Office for National Statistics (ONS) revealed UK GDP dropped 19.8% in the second quarter of this year, better than the first estimate of 20.4%.
Despite the upward revision, it was still however the worst fall since the ONS began recording quarterly GDP figures in 1955, and the worst contraction among any major economy.
WILLIAM HILL AGREES £2.9BN TAKEOVER
US casino giant Caesars Entertainment has moved a step closer to acquiring gambling company William Hill (WMH), after its board of directors agreed to Caesars’ £2.9 billion takeover bid.
William Hill has agreed to accept Caesars’ cash offer of 272p per share, a 58% premium to its closing price on 1 September, the day it was first approached by Caesars.
The deal still needs to be approved by at least 75% of shareholders at a general meeting, and comes after two rival bids by the US private equity group Apollo were turned down.
Chairman Roger Devlin said, ‘The William Hill board believes this is the best option for William Hill at an attractive price for shareholders.
‘It recognises the significant progress the William Hill group has made over the last 18 months, as well as the risk and significant investment required to maximise the US opportunity given intense competition in the US and the potential for regulatory disruption in the UK and Europe.’
William Hill shares traded 0.2p higher at 274.4p.
888 UPS DIVIDEND AND GUIDANCE
Online gambling company 888 888) soared 25.5% to 261.75p after it upped its dividend and lifted its guidance after first-half profit more than doubled, led by an increase in casino revenue and customer growth.
The company said it now anticipated adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for 2020 to be ‘significantly ahead’ of its prior expectations.
For the six months ended 30 June 2020, pre-tax profit increased 130% to $50.9 million year-on-year as revenue rose 37% to $379 million. Casino revenue increased 48% to US$260.0 million.
The interim dividend was raised to 3.2 cents per share from 3 cents and included an additional one-off 2.8 cents bringing the total to 6 cents.
SHELL CUTS 9,000 JOBS, NARROWS PRODUCTION GUIDANCE
Oil giant Royal Dutch Shell (RDSB) softened 0.24% to 954.25p after it said it would cut up to 9,000 jobs by the end of 2022 as it adapts to a lower oil price environment amid the pandemic.
Shell said job cuts of 7,000-to-9,000 were expected, including around 1,500 people who had agreed to take a voluntary redundancy this year.
The company also narrowed its third-quarter production forecast for its upstream oil and gas business after it took a hit from hurricanes in the US Gulf of Mexico.
Production for the three months through September from the upstream business was expected at between 2.15 million and 2.25 million barrels of oil equivalent per day, the company said.
That compared to guidance given at the time of the company’s second-quarter results of between 2.1 million and 2.4 million barrels.
OTHER CORPORATE NEWS
Defence technology company QinetiQ (QQ.) firmed 3% to 277p as it reinstated its dividend, while guiding for a full-year earnings performance ‘modestly ahead’ of current market expectations.
QinetiQ said it would pay an additional dividend of 4.4p per share, representing the deferred final dividend from the 2020 financial year.
Food caterer Compass (CPG) was a drag on the market, dropping 4.1% to £11.58 after it flagged a £100 million contract impairment charge.
On a more positive note, Compass said its business was now breaking even at a trading level, following improved performance in the fourth quarter.
Video games developer Sumo (SUMO:AIM) rallied 7.6% to 212.5p on announcing that it had agreed to acquire US-based rival Pipeworks for up to $99.5 million, including debt.
Sumo also a reported a more than doubling of first-half profit as demand for gaming soared during lockdowns.
Defence company Chemring (CHG) gained 2.8% to 240p, having won separate contracts from the US Navy and Air Force.
Advertising firm M&C Saatchi (SAA:AIM) dropped 0.5% to 57.3p on announcing that its shares would be suspended from trading on Thursday due to delays in publishing its results for 2019, which it said would show a deeper annual loss.
Fast-fashion retailer Boohoo (BOO:AIM) delivered forecast-beating first-half results showing no slowdown between the first and second quarters and raised sales growth and earnings guidance for the 2021 financial year. However the shares softened 2.6% to 380p as Boohoo flagged higher costs to come and sounded a note of caution on the outlook for consumer spending.
Recently listed online retailer The Hut Group (THG) dipped 0.8% to 599p on news that it had acquired US skincare brand Perricone MD for $60 million.