UK stocks head higher in tune with European markets on Wednesday, the FTSE 100 adding 0.3% to 7,157 to close in on recent highs, although traders have one eye on the pound after the consumer price index dropped below 2% for the first time in a year.
Leading the gainers is packaging firm DS Smith (SMDS) with shares up 4% to 349p following strong results from rival Smurfitt Kappa (SKG) which is enjoying a 5% rally in its Dublin-listed shares.
DS Smith updates the market on third quarter trading early next month.
Also enjoying a rally are FTSE house-builders Persimmon (PSN) and Barratt Developments (BDEV), up 2% apiece to £23.48p and 570p respectively, after smaller rival Galliford Try (GFRD) delivers a positive first half trading update.
Galliford chief executive Peter Truscott describes the group as entering the second half with ‘a solid foundation, underpinned by a strong balance sheet’, while the shares add 3% to 745p.
Home furnishings group Dunelm (DNLM) shows once again that it is made of different stuff to the rest of the retail sector, posting a 6.9% increase in first half like-for-like sales and a 3% rally in its shares to a new 12-month high of 742p.
Jet engine-maker Rolls Royce (RR.) adds 3% to a new 3-month high of 937p on news that Airbus may end production its A380 super-jumbo in favour of smaller models such as the A330 and A350.
Rolls-Royce supplies Airbus with the Trent 7000 engine for its A330 models and although it ran into production problems last year, in its last trading update it promised to increase deliveries ‘significantly’ this year.
Rolls reports its full year earnings on the last day of this month.
In other news, Intercontinental Hotels Group (IHG) announces it has bought Six Senses Resorts Spas for $300m in cash from private equity firm Pegasus.
Six Senses is an ‘asset-light’ business meaning that it manages hotels rather than owning them.
It currently manages 16 luxury hotels and resorts with 18 management contracts in the pipeline and more than 50 more contracts under discussions.
IHG shares trade sideways at £44.84 on news of the deal.
Estate agency Countrywide (CWD) reports a 7% fall in full year revenues and a 50% fall in earnings before interest, tax, depreciation and amortisation (Ebitda) due to ‘challenging’ market conditions.
It also reveals a £2m write-down on the value of ‘certain assets and liabilities’ which it says is unrelated to current trading.
Curiously the shares rally 2% to 10p on the news.
Also delivering negative news is Hochschild Mining (HOC) which has announced it is suspending operations at its Arcata mine in south west Peru.
Arcata was the company's first site and was opened in 1964 but low silver prices mean it is uneconomical to continue mining.
The shares dip 1% to 189p in respect.
Disclaimer: The author owns shares in Barratt Development
