UK stocks started the week on the back foot as concerns over corporate earnings started to surface ahead of the third-quarter reporting season.

The FTSE 100 index of leading stocks gave up 14 points or 0.2% to 7,139 with Aerospace, Banks, Insurers and Metals Producers lagging. Propping up the index were Healthcare stocks and Oil Producers, the latter thanks to a small bounce in Brent crude prices.

COST CUTTING FEARS

Shares in global banking giant HSBC (HSBA) dragged on the index, down 0.8% to 597p on press reports that new chief executive officer (CEO) Noel Quinn was considering laying off up to 10,000 staff.

The bank needs to cut costs in the face of the US-China trade war, continued unrest in its home market of Hong Kong and ongoing uncertainty in the UK over a potential hard Brexit.

WEAK CONSTRUCTION MARKET

Shares in building materials group SIG (SHI) collapsed 25% to 90p after it warned on full year earnings due to worsening trading conditions in its key markets.

The firm had already reported a fall in construction activity and a weakening economic backdrop in the UK and in Germany.

The deterioration in trading conditions ‘has accelerated over recent weeks’ just as the company approaches its strongest trading months of the year. Therefore SIG now expects ‘significantly lower underlying profitability for the full year than its previous expectations.’

SMALL-CAPS UPBEAT

Newly-listed foreign-exchange business Argentex (AGFX) delivered a positive maiden first half trading update sending its shares up 7% to 150p.

Client numbers and currency volumes both grew in the six months to 30 September, with non-executive chairman Lord Digby Jones re-iterating the company’s full year earnings expectations.

Pawnbroking firm Ramsdens (RFX) also reported strong trading in the six months to the end of September, sending its shares up 3% to 200p.

CEO Peter Kenyon was upbeat about the firm’s prospects going forward: ‘The Board remains confident that the Group will continue to successfully deliver its strategic objectives and make further progress during the second half of the year.’

There was further positive news from fisherman’s friend Angling Direct (ANG:AIM) as it reported a 21% jump in half-year sales to £26.5m and an 18% rise in gross profits to £8.5m. Shares added 5% to 61p.

DASH FOR CASH

Media and leisure business Time Out (TMO:AIM) announced a placing of 13.5m shares at 127p to raise up to £17.1m. The cash will be used to finance the roll-out of the Time Out Market concept and to reduce debt. Shares traded sideways at the issue price of 127p.

Alternative finance provider Duke Royalty (DUKE:AIM) also announced a capital raise including an open offer for existing shareholders on the basis of 2 new shares for every 51 old shares. Duke shares dropped 4% to 45.5p.

Banknote- and passport-printing firm De La Rue (DLAR) announced the appointment of a new CEO as of today. Clive Vacher, previously CEO of Canadian power firm Dynex, will take over from incumbent Martin Sutherland with immediate effect. De La Rue shares marked time at 224p.

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Issue Date: 07 Oct 2019