UK stocks have bounced back a little this morning after yesterday’s nervousness over the Saudi Arabia oil attacks and what they’ll mean for global growth, given the major spike in the oil price.
The UK’s leading basket of stocks, the FTSE 100 index, was up 0.25%, or 18.27 points, to 7,339.38.
SIRIUS MINERALS PROJECT IN DOUBT
The big news of the morning comes from the FTSE 250, where potash miner Sirius Minerals (SXX) admitted that it won’t be able to raise $500m from a bond offering.
Getting that money by the end of the month was crucial for the project going ahead, as it would’ve given JP Morgan enough confidence to effectively lend Sirius another $2.5bn to help get the mine up and running.
But now the bond has been pulled – Sirius Minerals CEO Chris Fraser has blamed ‘ongoing poor bond market conditions for an issuer like Sirius’ – the firm won’t get the JP Morgan cash, and has therefore scaled back development on the project.
It has also decided to conduct a ‘comprehensive strategic review’ of the project, something which doesn’t spell good news.
The market has responded accordingly, with Sirius shares plunging 60.9% to 3.9p, having opened as far down as 2.1p.
Elsewhere, online grocery retailer Ocado (OCDO) fell 1.7% to £13.26 despite reporting an 11.4% rise in retail sales, putting it on track to meet its full year guidance.
In a trading statement, the firm said retail revenue in the 13 weeks to 1 September rose to £386.3m, up from £346.9m last year.
WIZZ AIR HEDGES BEFORE OIL ATTACK
Budget airline Wizz Air (WIZZ) rose 1.3% to £34.16 after giving the market an update on its fuel strategy following the big increases in fuel prices in recent days thanks to the Saudi Arabia oil attack.
The attack, which disrupted 5% of the global supply of oil, pushed oil prices up and understandably helped the big oil and gas companies, but damaged airlines, who will now have to pay more for their fuel.
But Wizz Air has told the market that it took advantage of lower fuel prices over the summer to lock in prices as they were then for over 50% fuel to be used over the next 12 and 40% of fuel to be used over 18 months.
Wizz Air has a hedging policy which aims to reduce short-term volatility in earnings and liquidity.
FRENCH CONNECTION STRUGGLES
Pre-tax losses for the six months through July came to £4.7m, compared to losses of £15.1m in the same period the previous year, but revenue fell 12% to £51m, which the company pinned on store closures and a shift in timing of wholesale shipments into the second half.
The firm added that it has extended its strategic review until the end of its financial year.
Popular dividend-paying stock Central Asia Metals (CAML) dipped 0.4% to 187p as it maintained its interim dividend at 6.5p per share.
In its unaudited six month results to 30 June, the firm reported a drop in revenue to $89.9m, compared to $102.4m in the same period last year, and a fall in group EBITDA to $56.7m, compared to $64.6m the previous year.