UK shares opened firmer on Wednesday despite further political uncertainty after MPs voted against the Government last night, prompting fears that the prime minister would seek a snap general election under the Fixed-Term Parliaments Act.
The FTSE 100 index gains 0.6% to 7,312 with banks, insurers, miners, oils and retailers contributing positively.
Among the banks, index heavy-weight HSBC (HSBA) gained 2% to 606p on market talk that Carrie Lam, chief executive of the Hong Kong special administrative region, will officially withdraw a proposed extradition bill.
Shares in emerging market-focused bank Standard Chartered (STAN) also gained 3% to 645p on the unconfirmed story.
In contrast, shares in Royal Bank of Scotland (RBS) dropped 1% to 182p after the high-street lender revealed that it needs to increase its provisions for payment protection insurance (PPI) mis-selling.
Due to a ‘significantly higher than expected’ volume of claims last month ahead of the deadline for filing complaints, RBS needs to set aside between £600m and £900m of additional provisions.
As of 30 June the bank had made provisions totalling £5.3bn, of which £4.9bn had been paid out. It will take the extra provisions in its third quarter results, although it cautions that ‘the estimated range amounts are preliminary and unaudited’ meaning they could be higher still.
Barratt Developments (BDEV) was the first of the housebuilders to test the water with its full-year results. While it reported an increased operating margin and record pre-tax profit for the 12 months to 30 June, average selling prices and completions were disappointing and the shares fell 3.4% to 600p.
Rival Redrow (RDW) publishes its full year results tomorrow while Berkeley Group (BKG) delivers a trading update on Friday. Redrow shares climbed 1.2% to 566p while Berkeley shares added 0.6% to £39.05.
Shares in homewares retailer Dunelm (DNLM) gained 2% to 897p after yet another sparkling set of results. While sales for the year to 29 June grew by 4.8% to £1.1bn, the company increased its gross profit margin by a further 1.6% to 49.6% thanks to fewer lower-margin items and better stock control.
That helped lift pre-tax profit by 35% to £125.9m, paving the way for a special dividend of 32p in addition to the core dividend of 28p.
Car-accessories and bike retailer Halfords (HFD) blamed the ‘challenging retail backdrop and tough weather comparators’ for a 3.9% slide in group like-for-like sales in the 20 weeks to 16 August.
While its autocentres, online and business-to-business units performed well, a drop in demand for big-ticket items like high-end bikes and in-car technology dragged retail sales down by 4.8%.
After a sharp sell-off yesterday which wiped 8% off the value of the company, shares ticked up by 1% to 174p.
Fund management group Premier Asset Management (PAM:AIM) announced an all-share merger with rival Miton Group (MGR:AIM) to create a firm with £11.5bn of assets under management.
Investors in Miton will receive 0.3 shares of Premier for each of their shares, which based on last night’s closing price of 171.75p per Premier share values Miton shares at 56.74, or a premium of 38%, comprising an equity value of 51.84p and a special dividend of 4.9p.
The chairman and chief executive of Premier will assume the same roles at the combined group with Miton’s chief operating officer taking the role of chief financial officer. Premier shares climbed 2% to 185p while Miton shares vaulted 24% higher to 51p.
Shares in cyber-security specialist Avast (AVST) fell 5% to 366p after major shareholder Sybil Holdings sold its entire 12.4% stake at a price of 367p. Avast shares have performed strongly over the past few weeks after the firm posted better than expected first half results.
