Market report

Taylor Wimpey tops forecast| L&G | Hut deal | RR asset sale


5pm: FTSE 100 higher on PMI data

The FTSE 100 closed 18.14 points, or 0.3% higher at 7,123.86, below the day’s peak of 7,142.54 but above the session low of 7,105.72.

It was pushed higher by an upward revision for the UK services PMI ahead of the Bank of England interest rate decision on Thursday.

The day’s gainers were led by Ladbrokes and Coral bookmakers’ owner Entain whose shares have also hit record highs on speculation that MGM Resorts might return with a renewed bid.

Legal & General closed up 2.9% after the pensions giant revealed earnings “well above” pre-virus levels in a strong first half.

Taylor Wimpey closed 1.9% higher after it raised full-year guidance on a buoyant UK property market that saw it completing on a record number of homes (see below).

9.50am: GDP revised

Scotland’s GDP is now estimated to have fallen by 1.8% during the first quarter of 2021 against a previous estimate of a 1.9%, according to Scottish government data.

In quarterly terms, the level of GDP is now 8.1% below the level in the fourth quarter of 2019, prior to the direct impacts of the coronavirus pandemic.

9am: Market higher

The FTSE 100 was trading 29 points higher at 7,134.74 with Taylor Wimpey among the day’s top risers, up 4.3% to 171.9p on the back of positive figures (see below).

“The FTSE 100 continues to fight back after a sell-off in mid-July, says Russ Mould, investment director at AJ Bell. “If it can break the 7,217 intraday high seen on 16 June, then the index would be trading at levels not seen since February 2020 when global markets started to crash as the pandemic spread.

“Taylor Wimpey has reported a record half-year, albeit helped by some completions which were delayed from the previous six-month period.

“Fears that the property market would slow down as the stamp duty holiday winds down have proven wrong as it looks as if appetite is still very strong. That’s got to be helped by lots of people having saved cash during lockdown, giving them a greater chance of having enough money to put down as a deposit on a home.”

7am: Taylor Wimpey

Taylor Wimpey

The housebuilder said it had seen a record first half performance with 7,303 homes completed, though partly due to the delayed Q4 2020 completions.  

It anticipates full year 2021 completions for the UK, excluding joint ventures, to be towards at the upper end of its guidance range of 13,200 to 14,000 homes. It expects to end 2021 on a similar number of outlets to those at the beginning of the year.

“We now expect 2021 full year group operating profit to be c.£820 million, above the top end of consensus,” it said.

The company has declared an interim dividend of 4.14p per share (c.£151 million in total).

7am: Hut Group acquires Cult Beauty

The Hut Group has acquired Cult Beauty, the UK based online beauty retailer of prestige and emerging independent brands in a deal worth £275m.

Cult shareholders include Mark Quinn-Newall, who is co-founder of Net-a-Porter, and co-chief executive Alexia Inge.

Cult Beauty is the authorised online retailer of about 300 third party brands across skincare, haircare and cosmetics, including Charlotte Tilbury, Drunk Elephant and Huda Beauty..

About two-thirds of these brands are not currently listed on existing THG Beauty sites, representing an opportunity to broaden consumer choice globally.

Cult Beauty will retain a very clear identity within THG Beauty.

7am: Rolls-Royce asset sale

Rolls-Royce is selling its Bergen Engines business to global engineering group Langley Holdings for an enterprise value of €63m.

The deal is part of the aero engine maker’s plan to generate at least £2bn from disposals. Sale proceeds will be used to help rebuild the company’s balance sheet.

Langley is funding the deal, together with working capital requirements for the Bergen business from existing cash reserves.

7am: Legal & General profits surge

Pensions giant Legal & General Group expects double-digit percentage growth in operating profit this year following a strong six months to the end of June.

Profit before tax leapt to £1.32 billion from £285m in the first half of 2020.

Operating profit from continuing divisions rose 13% to £1.27bn from £1.13bn in the corresponding period last year.

The surge in profit reflected a much better performance by its investments.

The company has declared an interim dividend of 5.18p, up from 4.93p.

Global markets

Expectations of a higher start in London came ahead of PMI readings for the UK and the US due later today, which will be eyed closely for clarity on how both economies are rebounding from the effects of the pandemic.

Asian shares shrugged off caution over the rapidly spreading Delta variant of the coronavirus to post one-week highs on the back of strong US corporate earnings and the success of the vaccine rollout globally.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last 1.1% up for its third straight day of gains to the highest since 26 July.

Japan’s Nikkei 225 fell 0.21% while Hong Kong’s Hang Seng was up 1.23%.

The Dow Jones Industrial Average closed 0.8% higher while the S&P 500 climbed 0.82% and the Nasdaq rose 0.55%.

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