The FTSE 100 dipped slightly on Thursday morning, although it remained above the 7,000 level at 7,118.3, following the UK’s easing of travel restrictions for some destinations including France, which will see less people being forced to quarantine on their return to the UK.
Strength in utilities and real estate was offset by weakness in miners and consumer non-cyclicals as investors waited for the Bank of England to confirm how and when it might start reducing stimulus measures.
‘Fixed income markets will be watching very closely as a shift in policy could see this active buyer of bonds turn into a seller,’ said Russ Mould, investment director at AJ Bell.
In corporate news, mining giant Glencore (GLEN) gained 0.2% to 330p after unveiling a plan to return a further $1.18 billion to shareholders via dividend and share buybacks following a jump in core earnings in the first half of the year thanks to rising commodity prices.
Advertising agency WPP (WPP) improved 2.9% to 968p after it posted strong first half results with like-for-like sales growth of 16.1%, raised full year guidance with the global recovery gathering pace and announced a £350 million share buyback for the second half.
WPP now expects annual like-for-like revenue growth of 9-to-10%, up from previous guidance for mid-single digit growth, with headline operating margin towards the upper end of the range of 13.5%-to-14%.
Aero-engineer Rolls-Royce (RR.) rose 1.1% to 106p after returning to profit for the first six months of 2021, swinging from a £1.6 million loss to an underlying operating profit of £307 million, thanks largely by a good performance in its defence business and a recovery in order intake within the power systems division.
CEO Warren East said: ‘The benefits of our fundamental restructuring programme in civil aerospace are evident in our reduced cash outflow and improved operational efficiency. This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound.’
In the retail sector, Sports Direct owner Frasers (FRAS) cheapened 5.5p to 609.5p on the news Mike Ashley is stepping down as CEO, with his future son-in-law Michael Murray to assume the role in May 2022.
This news somewhat overshadowed robust full year results from the Flannels-to-House of Fraser owner, with underlying EBITDA up 29% to £391 million despite revenue falling 8.4% as UK stores were shuttered for around six months due to Covid.
While Frasers’ UK stores have reopened ‘above expectations’ with the online business continuing to ‘significantly outperform pre-Covid-19 periods’, the retailer refrained from giving guidance for the current financial year due to ‘a high risk of future Covid-19 pandemic restrictions, likely to be over this winter and maybe beyond’.
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