UK stocks ended the Wednesday session on the up despite a relatively light day for corporate news, as a sixth round of talks began in Brussels over Britain’s post-Brexit trade relationship with the EU.
Elsewhere, the number of new Covid cases in Germany hit the highest level since April leading the government to rule out any further loosening of lockdown restrictions. At the same time Spain and the Netherlands have seen the number of new virus cases rise in recent weeks, reigniting concerns over economic growth this quarter.
The benchmark FTSE 100 put in an afternoon rally to close 0.6% higher at 6,111.98, with weakness in mining shares failing to offset gains for selected travel and leisure stocks.
The mid-cap FTSE 250 failed to match the blue-chips, drifting roughly 0.2% lower to end the day at 17,583.39.
In company news, mining giant Rio Tinto (RIO) lowered its full year refined copper output target due to delays restarting the smelter at its Kennecott mine in Utah after ‘unexpected issues’ appeared during routine maintenance.
The firm hopes to have the plant back up and running in two months but cut its production guidance for refined copper to 135 to 175 kt from 165 to 205 kt previously. Shares gave up 0.4% to £48.14.
Lighting firm Luceco (LUCE) raised its full year guidance for the third time in as many months, saying it now sees operating profits of ‘at least £23 million’ against ‘at least £18 million’ previously thanks to market share gains with online/multi-channel capable customers and in consumer/DIY markets where demand has been 'robust’.
The company saw a steady improvement in demand during the second quarter and said it had ‘good visibility’ for the third quarter. It now expects like for like sales to grow by low single digits thanks to some channel restocking and higher demand from professional and wholesale customers.
The news sent shares soaring 17% to 186p and is likely to lead to another round of earnings upgrades from analysts.
Latin American resources firm Hochschild Mining (HOC) dropped 11% to 248p, having reported a 35% slump in first-half revenue owing to a hit from the Covid-19 pandemic.
Dividends remained off the table at Hochschild after the full-year payout was pulled earlier in 2020.
IT RESELLER BEATS
Software company Softcat (SCT) rose 2% to £13.575 on announcing that it would revive its cancelled interim dividend, having delivered a full-year operating profit 'slightly ahead' of its expectations.
The payout news came amid a decision by Softcat to resume its normal dividend policy and timetable later this year, though it added this was contingent on 'no material adverse movement in prevailing conditions'.
House builder Persimmon (PSN) edged up 0.1% to £28.24 as it announced that incoming chief executive Dean Finch would arrive earlier than expected, having agreed to leave bus company National Express at the end of August.
National Express, meanwhile, said chief financial officer Chris Davies would take over as interim CEO until a permanent appointment was made. Its shares reversed 0.4% to 141.1p.
Gas-mask maker Avon Rubber (AVON) gained 2.8% to £35.27 after it was awarded a 10-year contract by NATO to supply FM50 mask systems, powered and supplied air systems, filters, spare parts and accessories.
SMALL CAP WRAP
The group has won 21 new contracts so far in the second half with an annualised value of £16 million, adding £40 million to the order book and taking it to a seasonal high. It also paid off all its borrowings at the end of July and said it was considering a ‘sustainable’ dividend policy which would be more than covered by ‘significant earnings per share and regular recurring cash flows’.
Meanwhile, below most investors’ radar, Saudi financial group Mithaq Capital more than doubled its stake in the world’s biggest litigation funder Burford Capital (BUR) this week, taking its holding from 5.1% to 10.5%.
In addition to its stake in Burford, Mithaq owns 8.7% of the shares of airport services firm John Menzies (MNZS).
Traffic data and software provider Tracsis (TRCS) advanced 2.4% to 589p, having guided for a lower annual pre-tax profit, though with a smaller-than-expected fall in revenue.
Tracsis's revenue for the year through July was expected to be around £48m, down from £49.2m on-year, with the Covid-19 crisis taking out a £10m chunk that was nevertheless ‘much less than originally feared’.