The FTSE 100 shoots up in early reaction to a base rate cut by the Bank of England (BoE) on Thursday. The BoE has cut the base rate from 0.5% to 0.25% in response to a weakening UK economy.
The market had largely anticipated a rate cut and the Bank potentially adding to its £375 billion stimulus programme after disappointing manufacturing and services data in the past week. But that has not stopped the UK's blue-chip index shrugging off its previous torpor to rise around 90 points to 6,724.
In corporate news, pensions giant Aviva (AV.) leads the FTSE 100 leader-board in early trading by shrugging off the threat of recession to lift its interim dividend by 10% to 7.4p a share. The life insurer advances 5.4% to 405.3p on the news after net written premiums were 7% higher in the six months to 30 June while operating profits increased 13% to £1.3 billion.
Close behind was More Than insurer RSA (RSA), gaining 2.4% to 510.5p. The home and car insurer reported a 72% spike in underwriting profit to £119 million in the first half of 2016. The board believes that the group is well placed to avoid the worst of any impact from the Brexit vote due to the majority of its earnings generated in overseas.
Leading the blue chip fallers was drug-maker Hikma Pharmaceuticals (HIK), which dived 13.7% to £23.02 on lower profit expectations in its generics business on product approval delays and litigation costs.
Paper and packaging specialist Mondi (MNDI) slips 2.2% to £15.00 despite pre-tax profits in the six months to 30 June improving 23% to €482 million. The market is concerned at warnings of some mills closing for maintenance in the second half along with the usual seasonal downturn.
Aerospace and defence business Cobham (COB), a running Play of the Week, is down 5.5% to 158.7p, paring heavier early losses, as the company reveals it slipped into the red in the first half. The £2.7 billion cap posts a pre-tax loss of £38.4 million and cuts its dividend 20% to 2.03p.
Better-than-expected half year figures sent book-maker Ladbrokes (LAD) 1.9% higher to 141.1p. Pre-tax profits were £25.2 million in the six months to 30 June, compared to a £51 million loss a year earlier. The board thanked ‘bookmaker friendly’ results in the first half.
Specialist retailer Pets at Home (PETS) perks up 1.6p to 240.5p on a positive first quarter trading statement, reporting total sales up 8.9% to £244.2 million and underpinned by strength in advanced nutrition products as well as vet and grooming services.
African agri-business Zambeef Products (ZAM:AIM) fattens up 39% to 11.12p as UK development finance institution The Commonwealth Development Corporation (CDC) invests US$65 million in the business and becomes a supportive long-term shareholder.
The transformational deal will help Zambeef buy back its share of chicken businesses ZamChick and ZamHatch from joint venture partner RCL for cash, refinance its debt and accelerate the roll out of its thriving macro outlet stores.
Homewares maker Portmeirion (PMP:AIM) is marked down 15p to 897.5p as interims reveal a 22% taxable profit slump to £1.4 million. This performance is in-line with the Spode-to-Royal Worcester brand owner's recent profit warning and reflects a demand drop-off in Asia as well as disappointing UK trading 'before and following' the EU referendum vote.