The FTSE 100 gave up its early gains on Thursday, drifting off 2 points to 6,569 at midday despite US markets pushing to new highs on a stimulus package and a potential breakthrough regarding a Brexit trade deal.
Prime Minister Boris Johnson boosted hopes last night after saying there is ‘every opportunity of a deal’ to be done, while European Commission president Ursula von der Leyen said fishing access is the last barrier to an agreement.
However, the Bank of England left its benchmark lending rate at a 300-year low of 0.1% and left its asset purchase programme at £895 billion as it awaited the outcome of trade talks.
The pound gained 0.8% to break above $1.36 and make an 18-month high while gained 0.7% to $1,877 per ounce and Brent crude oil futures added 0.1% to $51.74 per barrel.
WPP TO RAISE DIVIDEND AND RESTART BUYBACKS
In company news, advertising agency WPP (WPP) gained 5% to 821p after it revealed plans to increase its dividend and restart share buybacks as it set out its plans for growth.
WPP said the payout would rise in 2020 and beyond, returning about 40% of headline earnings per share to investors, and expects to restart buybacks in 2021 funded by the proceeds of its sale of a stake in Kantar in 2019.
The firm also plans to cut £600 million of annual costs by 2025 and spend up to £400 million a year on acquisitions to expand in ecommerce and other areas, while reinvesting around two-thirds of the cost savings in people and technology to support growth.
Military equipment maker Avon Rubber (AVON) tumbled 12.5% to £32.72 as it warned on performance following a delay to first deliveries under its ballistics contracts with the US Army.
A delay in first deliveries under U.S. Defense Logistics Agency Enhanced Small Arms Protective Inserts and U.S. Army Vital Torso Protection body armor contracts would reduce overall expectations for its 2021 financial year, the company said.
But the company insisted it remained confident in achieving its medium-term expectations.
SERCO PROFIT SOARS ON TEST AND TRACE
Outsourcer Serco (SRP) gained 3% to 124p as it revealed in a trading update that it's underlying trading profit is expected to grow by around 35% to £160-165 million in 2020, consistent with previous guidance, with the margin increasing by around 40 basis points to slightly above 4%.
The company said its work on NHS Test & Trace continues to grow, and that it has recently been asked to substantially increase the number of call handlers it provides, while the number of test centres it’s supporting has also increased to 200 regional, local and mobile sites.
Revenue in 2020 is expected to grow by 19% to £3.9 billion, with organic growth of 16%. Adjusted net debt is set to come in at less than £100 million.
Food and beverage outlet operator SSP Group (SSPG) slipped 0.1% to 326p after it saw its profits plummet having been heavily impacted by Covid-19 and the closure of most of the global travel markets since March.
For the year ended 30 September 2020, the company reported an operating loss of £363.9 million, compared to a £221.1 million profit last year. Revenue fell by 47.9% to £1.4 billion, while like-for-like sales were down 50.8% on last year.
Oil and gas exploration and development company Cairn Energy (CNE) also declined 0.1% to 167p on revealing plans to return $250 million to shareholders via a special dividend, as it edged closer to completing its Senegal assets sale to Woodside by year-end after receiving regulatory and third-party approvals.
Following the completion of the sale, Cairn would pay a special dividend of 32p per share, amounting to a return of approximately $250 million or £188 million to shareholders. The special dividend was expected to be paid on 25 January 2021 to those on the register on 8 January 2021.
OTHER COMPANY NEWS
Broadband provider TalkTalk (TALK) gained 3% to 99p as it agreed takeover terms with Toscafund Asset Management in a deal worth £1.1 billion.
Investors representing about 45% of the company’s shares have agreed to the deal. The group also reported revenues of £740 million for the six months to 30 September, down from £792 million from last year.
Hotel operator Dalata Hotel (DAL) moved 3.5% higher to €3.95 after it expected full-year earnings to be ‘marginally ahead’ of market expectations as cost cuts eased the blow from second-half disruption amid Covid-19 restrictions.
But the company added, ‘The outlook for 2021 remains uncertain at present with short lead time on bookings and it is not yet known when international travel will return to more normal level.’
Mining company Anglo American (AAL) gained 2.2% to £25.02 as it said the value of rough diamond sales at its De Beers unit had increased during the tenth cycle of 2020 to $440 million from $426 million seen in the same cycle a year earlier. The figure compared with $462 million seen in the ninth cycle of 2020.
‘Positive consumer demand for diamond jewellery as we enter the holiday season is supporting the continuation of retail orders for polished diamonds from the diamond industry’s midstream sector,’ De Beers chief executive Bruce Cleaver said.