UK shares were dragged lower on Wednesday afternoon following Rishi Sunak’s stark report on the state of the UK’s finances as revealed in his spending review.
According to the Office for Budget Responsibility the economy will not return to pre-Covid-19 levels until the fourth quarter of 2022. Meanwhile the budget deficit is expected to remain as high as 4% of GDP in 2025/6.
Weekly US jobless claims cams in higher than expected while durable goods data came in weaker, setting a more cautious tone to markets.
At 16:30 the FTSE 100 was down 0.7% at 6,3987 points.
Heating, ventilation and air conditioning division Nortek saw its best ever performance under Melrose’s ownership during the period, while the auto parts and metallurgy divisions were steady and the civil aerospace division avoided a further deterioration in market conditions.
Trading improved in the third quarter with revenues down just 3% on last year compared with a 10% shortfall in the first half, while margins expanded and the firm’s net cash pile continued to grow. The shares dropped 2.8% to 309p.
Shares in animal genetics firm Genus (GNS) climbed 6.6% to £41.78 after it said that in spite of Covid and currency headwinds it saw full year earnings growing ahead of its previous expectations after strong trading in the last four months.
China’s pig industry is recovering slowly from the impact of African Swine Fever leading to good demand for Genus’s genetic products, while sales of sexed and beef-on-dairy products are growing rapidly across regions.
The offer, at 136p per share or a 24% premium to the previous closing price, consists of a mixture of cash and shares. GoCo shareholders will own 19% of the combined entity. Future shares slumped 16.7% to £16.34 while GoCo shares jumped 5.8% to 116.4p.
Shares in infrastructure and facilities management group Babcock (BAB) fell 1.1% to 350.8p after it posted a larger than expected drop in first half operating profits due to a combination of Covid headwinds, a weak civil aerospace market and the Government insourcing of the Magnox and Dounreay projects.
Shares in software firm Aveva (AVV) gained 24.4% to £32.95 after the admission of 125.7 million nil-paid rights-issue shares following the firm's £2.835 billion capital raise to part-finance its acquisition of OSISoft.