Market report

Pelosi trip prompts alert | AG Barr | Greggs | Direct Line

Wall Street reacted nervously to US House Speaker Nancy Pelosi’s trip to Taiwan. Stocks retreated for a second straight day

Ms Pelosi said on her arrival that it demonstrated Washington’s strong commitment to the self-ruled island, which China views as part of its territory.

She is the highest-ranked elected US official to visit Taiwan in 25 years and said her trip “in no way” contradicted official US policy.

“Our visit reiterates that America stands with Taiwan: a robust, vibrant democracy and our important partner in the Indo-Pacific,” she tweeted.

But her visit prompted a hostile response from China and the communist government launched missile tests and other military exercises in the region as a show of strength. 

Beijing has vowed to one day seize the island, by force if necessary. It tries to isolate the territory and opposes countries having official exchanges with it.

The S&P 500 fell 0.67 % and the Nasdaq 100 edged 0.3% lower.

Taiwan is home to the world’s biggest contract manufacturer of semiconductors, Taiwan Semiconductor Manufacturing and peer United Microelectronics. Shares of the companies fell 2.4% and 3%, respectively. 

Taiwan stocks dropped 1.6%, marking their biggest percentage decline in three weeks, while Chinese stocks posted their biggest fall in more than two months on the mounting geopolitical tensions.

In London, the UK blue-chip FTSE 100 index closed down 4.31 points at 7,409.11.

BP closed up 2.9% or 11p at 403.55p after second quarter profit jumped on stronger refining margins. Full story here

Fellow oil major Shell rose 1.4% in a positive read-across.

Housebuilders were the worst performers following the release of industry data that missed forecasts. Taylor Wimpey, which reports figures tomorrow, closed down 6.2%, Barratt Developments was 5.6% lower, Berkeley 5% off while Persimmon slid 4.2%.


AG Barr: 543.5p + 3p (0.55%)

Irn-Bru

Soft drinks firm AG Barr said revenue for the 26 weeks ended 31 July is expected to be c£157m, about 9% up on a like-for-like basis and 16% on a reported revenue basis (27 weeks to 1 August 2021: £135.3m) 

The company said the strong revenue performance reflects the continued positive momentum across all business units – Barr Soft Drinks, Funkin and MOMA. 

It said growth has been driven by ongoing brand investment and the successful execution of pricing and promotional activity. 

Trading performance further benefited from the year on year Covid recovery across the market, particularly in the on-trade and out of home sectors, as well as the exceptional British summer weather in recent weeks.

The company said it will take appropriate mitigating action to limit the full year impact of cost inflation. 

Roger White, chief executive, commented: “Our brands are performing well and our business has continued to demonstrate both its resilience and flexibility.

“While not immune to the current cost inflationary pressures experienced across the UK, looking forward into the second half of the financial year, we remain confident of delivering a full-year profit performance ahead of the prior year and in line with board expectations.”


Greggs: 2130p + 54p (2.6%)

Greggs

Like-for-like sales at the fast-food chain Greggs were up 22.4% in the first half over 2021 and 12.3% higher than in 2019. Profit came in flat at £55.8m (2021: £55.5m), reflecting the re-introduction of business rates, the increase in VAT and inflation.

An interim dividend of 15p is maintained.

The company opened 70 shops in the period and 12 closed to leave the portfolio at 2,239 shops as at 2 July. There is a strong pipeline of about 150 net new shop openings in 2022.

Matt Davies has been announced as chair designate, succeeding Ian Durant from 1 November.


Direct Line: 204.6p + 0.9p (0.43%)

Motor insurer Direct Line posted a 31.8% fall in pre-tax profit for the half year, but insisted the long-term outlook was strong and the dividend has been maintained.

Profit came in at £178.1 million compared with £261.3m in the corresponding period last year. The interim dividend is maintained 7.6p per share.

Penny James, CEO, said: “As we announced in our 18 July trading update, uniquely complex motor market conditions during the first half, due to significant regulatory changes, heightened claims inflation and macroeconomic uncertainty, have challenged our short-term profitability.

“However, the longer-term fundamentals of the business remain strong. Through pricing action, steps taken in our garage repair network and through deployment of enhanced pricing capability, we have now returned to writing at our target margins based on latest claims assumptions.

“We are pleased that all of our other businesses have continued to perform in line with expectations.”


Global markets

Tension between the US and China over Taiwan is doing little for Wall Street confidence and at the close, the Dow Jones Industrial Average was down 0.14%, the S&P 500 lost 0.28% and the Nasdaq Composite was off 0.18%.

Adding to these pressures, S&P Global’s manufacturing reading was revised slightly lower to 52.2 in July, down from a preliminary reading of 52.3, pointing to the lowest factory growth since July 2020.

The Institute for Supply Management’s manufacturing PMI dipped in July and US data, construction spending fell by 1.1% month-on-month.

Data out of China was attracting investor attention as the nation’s recent rebound begins to stall.



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.