UK stocks dropped on Wednesday as investors awaited news from the latest US Federal Reserve meeting for clues on its future interest rate policy after recent market worries over rising inflation.

Both the S&P 500 and Nasdaq 100 indices traded lower, adding to the selling pressure on the FTSE where gains in financials were offset by weakness in mining and energy shares.

At the close the benchmark index was down 40 points or 0.6% to 6,763 points. The FTSE 250 mid-cap index was weaker still, down 206 points or 1% to 21,558.

5G CAPACITY BOOST

Telecoms giant BT (BT.A) was the biggest FTSE 100 gainer after it said its EE mobile business had won 80MHz of 5G spectrum following an Ofcom auction, costing £452 million.

The spectrum auction now moves to a second stage, to work out where the acquired spectrum will be assigned within the band. Shares rallied 4.5% to 150p.

Investment platform Hargreaves Lansdown (HL.) gained 1.5% to £15.72 after it upgraded its outlook on profit following elevated volumes of share dealing since the end of January driven by interest in US stocks.

The company said it now expects pre-tax profit for the financial year ending 30 June 2021 to be ‘modestly above’ the top end of analyst expectations, which were in range of £334 million to £360 million.

Peer AJ Bell (AJB), the owner of Shares, also rose 1.6% to 425p in the wake of upgraded forecasts issued by broker Numis.

Iron ore pellet producer Ferrexpo (FXPO) proposed a special interim dividend of 39.6 US cents, taking the total dividends for the year 2020 to 72.6 US cents, up from 19.8 US cents last year.

Pellet production rose 7% to 11,218kt and sales volumes were up 17%.

For the 12 months ended 31 December 2020, pre-tax profit jumped to $747.9 million from $459.6 million as revenue rose 13% to US$1.7 billion. Shares gained 1.4% to 360p.

£475 MILLION CASH CALL FOR SSP

Shares in travel hubs stores operator SSP (SSP) fell 6.3% to 318p after it said it would launch a £475 million equity raising to bolster its balance sheet after the pandemic hurt footfall at travel locations, such as airports and train stations.

SSP did not indicate an issue price for the raising in its market filing, only saying the raising would be conducted via a 12-for-25 rights issue.

The company said it also had secured an extension to bank facilities that were previously due to expire in July 2022 to January 2024, conditional on completion of the equity raising.

SIMPLIFIED STRUCTURE, DISPOSALS

Shares in outsourcing company Capita (CPI) gave up early gains of as much as 7% to trade up 1.7% at 47p after the company said it plans to return to organic revenue growth this year and achieve sustainable cash generation in 2022.

The company will simplify its business into two core divisions and create a new third division comprising an expanded portfolio of non-core businesses which will realise ‘significant’ proceeds of £700 million.

Capita said full-year results were in line with expectations set at the half-year with revenues down 9% to £3.1 billion and adjusted pre-tax profit down 67% to £65.2 million.

Higher cash conversion and improved cash collection resulted in better adjusted free-cash flow of £238.6 million compared with an outflow of £23.2 million in 2019.

Services provider Serco (SRP) has won a contract extension worth up to around £870 million to provide support services at the 5 Wing forces base in Goose Bay, Canada.

The firm anticipates annual revenue of £20 million-to-£30 million in the opening years. The shares gained 1.5% to 139.5p.

Cruise operator Carnival (CCL) said its P&O Cruises fleet said it will offer a series of short domestic cruises on flagship Britannia in the UK this summer and and week-long cruises on new ship Iona.

These cruises will depart from Southampton between June and September, sailing around the UK coast. The shares dipped 1% to £17.15.

OTHER NEWS

Performance nutrition group Science in Sport (SIS:AIM) said pre-tax losses for the year through December amounted to £2.3 million, compared to year-on-year losses of £5.1 million.

Revenue edged back to £50.4 million, from £50.6 million and underlying operating earnings were £1.1 million, swinging from a loss of £0.2 million. The shares gained 13% to 58.5p.

Shares in education software provider Tribal (TRB:AIM) flew 5.7% higher to 102p after saying annual recurring revenue increased 13.4% to £47.5 million, providing a strong basis for future growth.

Foreign exchange provider Alpha FX (AFX:AIM) reported full-year revenues up 31% to £46.2 million and underlying profit up 20% to £17.5 million. The shares slipped 3.2% to £13.75.

DISCLAIMER: AJ Bell is the owner and publisher of Shares magazine. The author owns shares in AJ Bell.

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Issue Date: 17 Mar 2021