UK stocks began August on the front foot, lifted by further UK merger and acquisition activity in mid-caps.

Oil and Gold prices were lower with Brent Crude down 0.9% to $74.7 per barrel and Gold was 0.4% down at $1,807 per ounce.

At the close the FTSE 100 index of leading shares was up 50 points or 0.7% at 7,082 points led by aerospace and retail stocks.

The mid-cap FTSE 250 index was up 260 points or 1.1% at 23,209 points driven by gains in bid-related stocks.

TAKEOVERS SPEED UP

Defence, aerospace, and energy engineer Meggitt (MGGT) said it had agreed to be acquired by US industrial group Parker-Hannifin for £6.3 billion or 800p per share in cash, representing a 71% premium to Friday’s closing price.

Parker-Hannifin has committed to maintain existing technology and manufacturing that resides in the UK.

Separately, the FTSE 250 firm said first half underlying pre-tax profit fell 42% to £48.4 million, as revenue fell 16% to £680.0 million, hurt by weakness in the civil aerospace market. The shares surged 56% to 732p.

Shares in other aerospace and defence firms such as Melrose (MRO) and Rolls-Royce (RR.) also made sharp gains.

Meanwhile, FTSE 250 asset management services company Sanne Group (SNN) gained 8% to 908p after the company said it was  in advanced talks on a possible cash offer from private equity group Apex Group at price of 920p per share.

Power utility SSE (SSE) said it had agreed to sell its 33.3% stake in UK gas distribution operator Scotia Gas Networks for £1.23 billion.

The stake was being sold to a consortium comprising existing Scotia Gas Networks shareholder Ontario Teachers' Pension Plan Board and Brookfield Super-Core Infrastructure Partners.

The deal will conclude SSE's £2 billion-plus disposal programme announced in June 2020, with total proceeds amounting to over £2.7 billion. The shares added 1.3% to £14.64.

Banking group HSBC (HSBA) said first half revenues dropped 4% to $25.6 billion reflecting lower net interest margins. However, all regions were said to be profitable with continued strength in Asia while HSBC UK reported pre-tax profit of $2.1 billion.

Overall, the bank said pre-tax profit increased by 151% to $10.8 billion as it released prior credit loss provisions. Return on tangible equity was 9.4%, up from a low of 3.8% last year.

The company expects to move within its target dividend pay-out ratio range of between 40%-to-55% of earnings per ordinary share in 2021. The shares edged 0.3% lower to 396p.

Pharmaceutical giant AstraZeneca (AZN) said its drug to treat adult patients with moderate to severe systemic lupus erythematosus was approved in the US.

The approval by the Food and Drug Administration was based on efficacy and safety data from the Saphnelo clinical development programme, including two Tulip phase three trials and the Muse phase two trial. Shares traded sideways at £82.74.

TRUMPING EXPECTATIONS

Power control solutions group XP Power (XPP) said first half pre-tax profit increased 59% to £16.4 million after revenues climbed 14% to £119.9 million.

The company said order growth was driven by continued strength in the semiconductor manufacturing equipment sector and a recovery in industrial technology.

Full year trading is now expected to be modestly ahead of consensus expectations. Current pre-tax profit forecasts for the year to December 2021 sit at £44.6 million.

XP Power declared an interim dividend of 37p, up from 18p year-on-year. The shares dipped 2% to £50.40, erasing earlier gains.

Investment trust RIT Capital Partners (RCP) nudged up its dividend by 0.7% to 17.625p per share after it reported a positive first-half performance.

The company's net asset value per share total return for the six months through June was up 19.1%, to £27.11, a new all-time high.

RIT Capital Partners said it bought back shares when they were trading on a high single-digit discount and intended to continue to purchase shares in the market when viewed as beneficial.

Chairman James Leigh-Pemberton noted that man developed markets posted low double-digit gains in the first half, despite continuing Covid-19 concerns and higher inflation figures. The shares gained 0.4% to £25.65.

Shares in Photo booth and laundry services group Photo-Me International (PHTM) rose 3.3% to 77.5p after it said a stronger-than-anticipated recovery of photo booth activity prompted it to increase full year pre-tax profit expectations to October by around 22% at the midpoint to between £25 million-to-£30 million.

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Issue Date: 02 Aug 2021