UK investors remain nervous ahead of Theresa May's speech later on Tuesday, where the Prime Minister is expected to lay out plans to exit the European Union. Her Anticipated hard line is sparking fears that Britain will lose access to the single market, potentially putting a serious dent in UK companies' ability to trade with their European counterparts.
The FTSE 100 index nudges around 20 points lower in early trade, or about 0.3%, to 7,307 territory having ended its record 14-day winning streak on Monday. Yesterday saw the blue-chips benchmark finish down for the first day since 21 December as banking stocks slumped on 'hard Brexit' worries, closing at 7327.13 points.
The big corporate news comes from the fags sector, where British American Tobacco (BATS) confirms that it has agreed terms to buy US rival Reynolds American (RAI:NYSE). The $49.4bn deal comes after BAT upped its offer for the 57.8% of the company it did not already own. BAT reckons tha it can strip out $400m worth of cost-savings through the merger, and its share price inches 0.2% higher to £47.435.
The Reynolds brands BAT is buying
Elsewhere, British baker Greggs (GRG) raises profit guidance for 2016 after a strong Christmas but cautions that it faces greater uncertainty in the trading environment in 2017 with increased pressure on real income growth. Still, investors appear willing to give the company the benefit of the doubt, chasing the stock nearly 5% higher in early deals to £10.50.
Global miner Rio Tinto (RIO) could be in a position to reward shareholders with a strong dividend hike or even a share buyback in 2017, according to analysts, as it benefits from a sharp rise in metals prices. But that speculation fails top prevent the Footsie mining giant falling back 1.7% to £34.28, among the bigger losers early on Tuesday.
British aero-engineer Rolls-Royce (RR.) reports overnight that it has reached settlements with authorities in Britain, the United States and Brazil relating to bribery and corruption involving intermediaries. The outcome will involve the group making a series of penalty payments totalling £671m, but that appears to be far less than investors had factored in, sending the beleaguered stock shooting more than 6% higher to 706p.
Oil explorer Tullow Oil (TLW) makes modestly positive ground to 314.7p as it makes a new oil discovery offshore Kenya. The find comes after drilling at the Erut-1 well in Block 13T, 50%-owned by Tullow alongside partners Africa Oil Corporation and Maersk Oil, both with 25%.
Blackwoods Gin, made by Distil
Among smaller companies, micro spirits maker Distil (DIS:AIM) rallies 22% to 1.4p after reporting 'significantly higher levels of sales' over Christmas. Year-on-year third quarter revenues jump 71% while volumes grew 56%.
Online learning specialist Learning Technology (LTG:AIM) reports forecast-busting profits for 2016 and EBITDA margins firmly ahead of strategic ambitions of 20%. There's also a big jump in recurring revenues to 27% of the total (from circa 10% in 2015) to drive a 14% share price jump to 42.75p.
