UK stocks opened higher on Thursday as investors put aside concerns surrounding renewed diplomatic tensions between the US and China.

The US has ordered China to close its consulate in Houston, Texas, after accusing it of stealing intellectual property. Beijing called the move a ‘political provocation’.

Despite being one of the most significant developments in the ongoing diplomatic battle between the world’s two largest economies, investors remained optimistic.

The FTSE 100 moved 0.23% higher to 6,221.53 shortly after trading began, mirroring gains seen across other European stock markets.

But it was a different story in Asia with China’s Shanghai Composite down 0.24% and the Nikkei 225 in Japan down 0.58%. However, the Hang Seng in Hong Kong was last seen 0.56% higher.

Unsurprisingly gold continued its upward march, with the safe haven asset gaining 0.26% to $1,875 per ounce. Oil also moved higher, with Brent crude oil futures up 0.52% to $44.51 per barrel.

UNILEVER JUMPS AS IT BEATS FORECASTS

In company news, consumer goods giant Unilever (ULVR) was the biggest risers as it jumped 7.1% to £46.38 after it beat sales forecasts.

Analysts had expected the FTSE 100 stalwart to report a 4.3% drop in second quarter underlying sales. However, in its half year results the firm revealed Q2 sales remained resilient, dipping just 0.3%.

Overall underlying sales growth reduced 0.1% in the first half of 2020 compared to the same period the previous year, with the 0.3% drop in sales offset by 0.2% in price growth. Turnover fell 1.6% to €25.7 billion, though underlying earnings per share gained 6.4% to €1.25.

SAGE GAINS ON SUBSCRIPTION GROWTH

Software company Sage (SGE) gained 1.7% to 716p after it reported recurring revenue for the first nine months of the year increased by 9%, driven by growth in software subscription of 22.6%, boosting total group revenue during the period by 4.1% to £1.39 billion.

In a trading update for the nine months to 30 June, Sage announced that recurring revenue grew to £1.24 billion, driven mainly by North America and Northern Europe.

Software subscription growth reached £885 million, up from £722 million in the prior year, as Sage said it had continued to focus on migrating existing customers and attracting new customers to Sage Business Cloud.

RELX HIT BY EXHIBITIONS LOSS

Scientific information provider RELX (REL) fell 4% to £16.93 after reporting lower revenue and operating profit as its exhibitions business was ‘significantly impacted’ by Covid-19 and moved to a loss in the first half.

In its interim results for the six months to 30 June, the company reported revenue of £3.5 billion, down 10%.

Relx said its exhibitions business, which accounted for 16% of revenue and 13% of adjusted operating profit in 2019, was ‘significantly impacted’ by Covid-19 in the first half of 2020, with revenue of £201 million, down from £684 million in the prior year.

TATE & LYLE JUMPS ON NEW PRODUCT GROWTH

Food and beverage ingredients supplier Tate & Lyle (TATE) gained 3.1% to 672p as it reported higher revenue in the three months to 30 June, boosted by growth in new products revenue of 9%, while volume was hit by the impact of lockdowns on out-of-home consumption.

In a trading statement, the company reported that revenue was up 1% to £232 million, as it benefitted from good price and mix management and new products revenue.

The company said that having seen ‘fluctuating demand patterns’ in April and May, demand improved in June as lockdowns started to ease, although it warned that the full extent of the pandemic’s impact remained ‘unclear’.

JOHNSON MATTHEY LOOKS FOR BETTER SECOND HALF

Chemicals company Johnson Matthey (JMAT) fell 1.7% to £22.23 after it warned performance would be second-half weighted as visibility on demand remained limited.

In a trading update the company said first-half results were ‘materially’ below last year, largely due to weaker activity in its clean air division. Clean Air sales were down about 50% in the first quarter, primarily driven by weaker consumer demand and temporary customer shutdowns in Europe and the Americas.

As the quarter progressed, the company said it saw improvement with April, May and June sales across clean air down 75%, 60% and 20% respectively.

Looking forward, Johnson Matthey anticipated July sales to be down about 20%, with improvement through the remainder of the second quarter.

OTHER COMPANY NEWS

Fellow chemicals company Croda (CRDA) edged 0.1% higher to £56.22 despite warning of limited visibility and reporting a fall in first-half profit and lower revenue amid a slowdown in demand.

Heat treatments supplier Bodycote (BOY) dropped 1.4% to 589p after it swung to a loss in the first half of the year as performance was ‘significantly’ impacted by the pandemic related downturn.

Mining group Polymetal International (POLY) gained 2.5% to £17.49 as it said revenue for the second quarter increased by 30% year on year to reach $641 million on the back of higher gold prices and sales volumes, as it also reported no interruptions or delays to operations and projects.

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Issue Date: 23 Jul 2020