UK equity markets rallied in early trading on Thursday with miners driving the benchmark FTSE 100 to 20-month highs on relief that property developer China Evergrande sidestepped a debt default.

The FTSE 100 was 0.4% up at 7,368.02 by 10am, wile the mid-cap FTSE 250 made similar gains at 23,523.80.

Retailers were under pressure following several disappointing updates that cast gloom on the sector. Luxury brand Burberry (BRBY) fell 6% to £18.56 after it said sales in Europe and Japan remained under pressure from reduced tourist levels, even as it exceeded quarterly profit expectations.

Adding to sector worries was discount retailer B&M (BME) which lost more than 7% at 597p after posting lower first-half core earnings.

Halfords (HFD) and Card Factory (CARD) were also off, although that follows strong gains earlier in the week after bullish updates.

Putting a data dampener on the market's mood were latest figures from the Office for National Statistics that showed UK economic growth slowing in the third quarter. Between July and September, gross domestic product grew just 1.3%, missing expectations of 1.5% and significantly below 5.5% growth recorded in the second quarter.

BATTERIES NOT INCLUDED

chemical company Johnson Matthey (JMAT) lead the FTSE 100 loser board on Thursday after the group revealed plans to exit its battery materials business and warned on profits.

Shares in the company slumped nearly 15% to £23.54 after the company said believes that potential returns from its battery business don’t justify further investment, while the company has also been hampered by supply chain difficulties that have hit the automotive industry.

Chief executive Robert MacLeod also announced that he will leave the company.  leaving the group. Shares were trading 11.6% lower at £24.42.

Also hurt in the automotive space was TI Fluid Systems (TIF), the biggest FTSE 250 faller. It’s shares slumped almost 10% to 248.5p after major shareholder Omega sold 40 million shares at 250p.

Going the other way, online cars and vans marketplace Auto Trader (AUTO) topped the FTSE 100 leader board, up nearly 11% at 685p as it reported its highest ever six-monthly revenue and profits.

For the six months ended 30 September 2021, pre-tax profit rose 127% to £150 million year-on-year and revenue was up 82% to £215.4 million. An interim dividend of 2.7p is proposed.

Retailer WH Smith (SMWH) reduced annual losses as cost cuts offset a slide in revenue. The narrower loss reflected a recovery in passenger numbers and tight cost control.

For the year ended 31 August, pre-tax losses narrowed to £116 million from £280 million, while revenue declined 13% to £886 million.

The company has decided not to pay a dividend. On a more encouraging note management is optimistic that it would be able to achieve 2019 sales levels in the current financial year. Shares drifted 0.6% lower at £16.055.

ELSEWHERE ON THE MARKET

Shares in insurance company Aviva (AV.) edged 0.9% higher to 409.3p, after the company reported 'strong' performance in the first nine months of the year, amid record inflows in savings & retirement business and 'excellent' growth in general insurance.

Savings & retirement net flows were up 21% year-to-date, while general insurance premiums grew 5% year-to-date reflecting 'solid customer retention and new business wins, particularly in commercial lines,' the company said. The group has completed £450 million of its £750 million share buy back.

Defence company BAE Systems (BA.) said it had agreed to acquire Bohemia Interactive Simulations, a developer of advanced military simulation and training software.

Bohemia Interactive Simulations, headquartered in Orlando, Florida, provides training software to the likes of the US military, which is its largest customer. No specific terms of the deal were disclosed. Shares edged 0.32% higher at 571.8p.

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Issue Date: 11 Nov 2021