UK stock markets plunged into the red in early trade on Wednesday as crunch time approaches over Brexit. On Tuesday Theresa May agreed the text of a draft withdrawal agreement with the EU and has called a meeting of senior ministers at Downing Street at 2pm today to approve the draft agreement.
But investors are clearly far from convinced that any deal will get the votes needed potentially leaving the UK economy facing more uncertainty.
At 9am the FTSE 100 index is trading down nearly 50 points, or roughly 0.7%, lower at 7,006.87, while all UK indices are also in the red.
EYES ON SMITHS SPLITS
Company news is dominated by the announcement that UK engineer Smiths (SMIN) plans to split its medical unit from the rest of the business in an attempt to sharpen its focus as a global industrial firm.
The separation idea remains at an early stage and investors will have to wait until half year results in March for more detail. In the meantime, trading in the first three months to 31 October show revenue down 1% on an underlying basis.
Smiths says its full year performance will hinge on a stronger second half, normally a worry for investors, yet shares in the group jump close on 5% to £13.725 in early trade on Wednesday, a clear indicator that investors like the idea of the Smiths splits.
UK energy supplier SSE (SSE) has reported losses of £246.4m for the six months to 30 September, a 41% drop compared to the same period in the previous year. Doubts are also swirling around its proposed merger with Npower, the UK consumer arm of German energy firm Innogy.
Npower has lost half a million customers this year, and with tariff price caps due to come into force, the group sees uncertainty everywhere. SSE said that revenues and cost of sales had been reduced by £7.9bn as a consequence of adopting the IFRS 15 reporting standard in April.
SSE shares manage a modest 1.2% rise to £11.45 but this must be drawn against declines from £14.40 levels in May.
PRU ON TRACK WITH OWN DEMERGER
Insurance group Prudential's (PRU) own planned split out of asset manager M&G remains on track the company assures on Wednesday. The news comes alongside nine months figures showing 2018 life insurance new business profit up 17%, once exchange rates are stripped out.
In Asia, a hugely important market for the Pru, new business profit increased 15% to £1.76bn with a 19% rise in health and protection new business profit.
Shares in the group remains largely flat (down 0.5%) at £16.07, having rallied into these figures from below £15.00, and valuing the business at around £41bn.
UK commercial landlord British Land (BLND) has reported a pre-tax loss of £42m in the six months ending 30 September, compared to a profit of £238m last year. It also saw a 2.9% fall in net asset value of its properties.
The group is highly exposed to the UK retail sector, which probably tells investors a lot about the struggles it is facing, as shoppers switch online and retailers invest in fewer physical stores.
Shares in the group are flat at 623.8p.
Also in the property space, shopping centre owner Intu Properties (INTU) has asked the Panel on Takeovers and Mergers for another extension to the deadline for making a cash offer to take the company private.
The extension has been granted, meaning that potential private equity buyers now have until 5pm on 22 November to announce whether they are willing to stump up the necessary cash to seal a sale of Intu.
CRASH SAFETY SUCCESS
Auto engineering and collision safety business AB Dynamics (ABDP) continues to win new fans after unveiling record revenue and profit for the year to 31 August.
Sales jumped 51% while pre-tax profit shot up 78% while order intake continues to run ahead of sales.
Shares in AB Dynamics, which have almost doubled during the past year, nudge 2.5p further ahead to £13.90, closing in on the record £14.45 levels hit in early October before the recent market sell-off.
Higher fuel costs and the weaker pound have finally done for struggling budget airline Flybe (FLYB) which is now considering hoisting the for sale sign. Saddled with too many planes, a costly IT overhaul and in an incredibly competitive market was always going to be a struggle for a company now worth less than a tenth of its previous value.
Today’s half year results show a huge decline in pre-tax profit to £7.4m and net debt soaring to £82.1m.
That the share price is modestly higher, up 1.7% to 11.9p, suggests that investor see a sale as the best way to extract any value from the business.
