UK stocks get off to a weak start on Wednesday with the FTSE 100 index down 0.4% at 7,063 after US markets reversed their gains towards the end of yesterday’s trading session.

The Oil sector is one of the few bright spots as crude prices continue their recovery. As Brent futures nudge back above $60 shares in BP (BP.) add 1.3% to 495p while Royal Dutch Shell (RDSB) shares hold firm at £21.87.

BP announced overnight that it would sell all of its oil fields in Alaska for $5.6bn, ending a 60-year association with the region as it re-focuses on its core portfolio, which also helps sentiment.

Oil and gas services group Petrofac (PFC) releases an upbeat half year earnings statement citing a ‘solid operational performance across the business’. Revenues were marginally higher at $2.8bn, while profits for the six months to 30 June were $139m compared with a net loss of $17m last year.

However new orders were impacted by ‘challenges’ in Saudi Arabia and Iraq, souring the mood and sending the shares down 1.4% to 400p.

Tobacco stocks weigh on the FTSE after news overnight that rivals Philip Morris International and Altria are in merger talks.

A deal would bring together two businesses which separated in 2008 due to regulatory pressures to create a $210bn competitor. Shares in British American Tobacco (BATS) fall 1.4% to £27.91 and Imperial Brands (IMB) falls 1.9% to £20.22.

A trading update from retailer WH Smith (SMWH) for the year to the end of August contains few surprises. The Travel business continues to perform ‘strongly’ with gross margins in line with estimates while the High Street business plods on with margins helped by cost savings. Shares add 0.6% to £20.04.

Fashion retailer Ted Baker (TED) gains 1.5% to 926p after it announces a licence deal with Japan’s Sojitz group to expand its network of branches and concessions in the country. Despite a cost of £4m the deal is expected to enhance earnings for the current financial year.

Shares in Thomas Cook (TCG) dive 15% to 6p after the company releases a recapitalisation plan which significantly dilutes existing shareholders. Under the plan China’s Fosun Tourism group will own 75% of the equity in the tour operations and 25% of the airline with the lending banks and bondholders owning the balance of each.

Restaurant operator Fulham Shore (FUL:AIM) issues a positive trading update ahead of today’s AGM, sending the shares up 3.6% to 11.5p. Like for like sales at The Real Greek had been slightly down on last year until recently but the hot weather this month has driven an increase in customers.

Café-bar operator Loungers (LGRS:AIM) releases positive maiden full year earnings after listing in May. Revenues were up 26% to £153m thanks to 6.9% like for like sales growth and new site openings. Shares tick 0.5% better to 207p.

 

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Issue Date: 28 Aug 2019