Daily Business Live

Go Ahead bus revival slows | Rolls-Royce nears nuclear deal


5pm: Lacklustre London

The London market struggled to get up any steam on a quiet day for announcements, leaving the US to take all the attention.

Commenting on the passing Joe Biden’s bill to release $1 trillion into the economy, Danni Hewson, AJ Bell financial analyst, said: “There were one trillion reasons for US markets to bounce into Monday and they didn’t disappoint with big gains by industrials propelling the Dow Jones to a new high, construction equipment giant Caterpillar rather unsurprisingly topping the gainers.”

The FTSE 100, by contrast, had a quiet day and closed just 3.56 points lower at 7,300.40.

Asset manager Abrdn offered the only excitement, up 3.21% after confirming it is in talks with private equity firm JC Flowers & Co about a potential acquisition of fund platform Interactive Investor.

4pm: Wall Street record

The Dow Jones Industrial Average hit a record high as the passage of a $1 trillion infrastructure bill lifted industrials, materials and other economy-focused sectors, while Tesla fell 4.4% on Elon Musk’s plan to sell about a tenth of his stake.

10.30am: Rolls-Royce nuclear consortium

Rolls-Royce and a consortium of investors are close to announcing that a consortium will provide finance for a small-scale nuclear reactor, it has been claimed.

The deal is expected to be backed by government which has previously promised support if it could be matched by private capital.

Rolls-Royce today completed the sale of its civil nuclear instrumentation and control business, which did not include either its UK civil nuclear business or its small modular reactor (SMR) activities.

SMRs, which are capable of generating around 500 megawatts of power, are not substitutes for full-scale nuclear plants, which produce around 3 gigawatts of power.

They are, however, considerably cheaper, with SMRs costing around £2bn in contrast to the £20bn it will cost to build the full-scale plant Hinkley Point in Somerset. The expected expansion of Sizewell in Suffolk is also expected to cost around £20bn.

Their size allows SMRs to be built in a controlled factory setting and installed in parts, thereby reducing both risk and costs.

Rachael Everard, head of sustainability at Rolls Royce, told the COP26 Edinburgh Summit last week that the company was working on a modular nuclear reactor the size of a football pitch that could provide enough power for a city the size of Edinburgh.

9.30am: Subdued start for equities

The FTSE 100 was flat, with strength in commodity producers being offset by weakness in financials.

Oil, gas and miners typically sell their products in dollars and their share prices will benefit from continued weakness in sterling after the Bank of England’s surprise decision to keep interest rates on hold last week.

“A drop in the pound is typically good news for the broader FTSE 100 index given this boosts the relative value of its dominant overseas earnings,” AJ Bell investment director Russ Mould.

The FTSE 100 was just 1.64 points higher at 7,305.60+1.64.

7am: BAE Systems ‘well-positioned’

In a trading update Charles Woodburn, BAE Systems chief executive, said: “We’re evolving our business to be well positioned for growth over the medium term alongside a focus on longer-term value drivers as we ramp up investment in advanced technologies and progress our sustainability agenda.

“Our continued good operational performance underlines our confidence in the full year guidance for top line growth and margin expansion as well as our three-year cashflow target. 

“Demand for our capabilities remains high and we have a strong pipeline of opportunities across our broad geographic portfolio that will enable our skilled, global workforce to deliver capabilities which will support our customers in responding to the evolving threat environment.”

7am: Artisanal relaunches historic brand

The Artisanal Spirits Company, owner of The Scotch Malt Whisky Society, has relaunched the historic JG Thomson & Co brand as it expands into blended whiskies and other drinks categories, including gin and rum.

Full story here

7am: Go Ahead bus traffic slows

Transport group Go Ahead said that while passenger volumes have increased over the first four months, it has seen a slight slowing in the recovery in recent weeks in line with the rest of the industry.

“Accordingly, there remains some uncertainty as to the speed and extent of recovery in the current year which, assuming the BRG [Bus Recovery Grant] ceases in March 2022, could impact the full year performance of the division,” it said in a trading update.

The rail division overall is expected to operate at around breakeven for the current financial year.

Discussions with the Department for Transport regarding London and Southeastern Railway, which transferred to the Operator of Last Resort on 18 October, and the associated independent review are ongoing and a further update will be provided with the group’s full year results.

7am: Abrdn confirms talks

Wealth manager Abrdn noted weekend reports that it is in talks with JC Flowers & Co, owner of Interactive Investor, about a potential £1.5 billion acquisition of the investment platform.

In a statement, Edinburgh-based Abrdn said: “The company notes recent media speculation and confirms that it is currently in discussions with JC Flowers & Co regarding a potential acquisition of Interactive Investor. 

“There can be no certainty that these discussions will result in a transaction and a further announcement by the company will be made as and when appropriate.”

Full story here

Global markets

Key data this week will be US and China inflation, with US producer prices due on Tuesday and the consumer price index figure the following day, while the Chinese figures are due on Wednesday.

Asia markets have got the week off to a quiet start this week, with the latest China trade data for October giving a mixed insight into the world’s second biggest economy.  Japan’s Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite was 0.8% lower, while the Hang Seng index in Hong Kong was down 0.6%.

UK corporate news will be dominated by retail figures. Primark owner Associated British Foods is due to release its preliminary results on Tuesday, and eyes will be on the fast-fashion retailer which does not have an online presence.

Marks and Spencer is issuing its half-year results on Wednesday, and the market will want to hear how it is coping with supply chain issues ahead of the key Christmas period.

On Friday, the FTSE 250 group said that almost half of its customers expect to finish their Christmas shopping by the end of November.

Burberry Group unveils interim results on Thursday, the first update since the announcement that the Versace boss Jonathan Akeroyd will be stepping into Marco Gobbetti’s shoes next year as chief executive.

Housebuilder Persimmon is expected to release a trading update on Tuesday, with most recent commentary from the company in August highlighting 20% growth.

Aviva should issues a nine-month update on Thursday and the life insurer is under pressure from activist Cevian Capital to hand out more of the proceeds of its £7.5bn disposal programme than the £4bn already flagged.

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