Inflation jumps | Omega upbeat | Restaurant Group rises
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5pm: Blue chips flat
The FTSE 100 index closed barely unmoved from the previous session as higher commodity prices supported oil producers while ongoing concerns about the Covid Delta variant, slowing global growth and inflation weighed on the broader market.
At the close, the blue chip index was 3.6 points, or 0.05% lower at 7,030.45 after trading in a range of about 30 points.
BP rose 3.08% while Royal Dutch Shell gained 1.81%.
3.30pm: Cabinet reshuffle
Three ministers have been sacked and the Foreign Secretary given a new job as Prime Minister Boris Johnson seeks a “strong and united” Cabinet following the turbulence of the past year.
9.40am: Scottish economy grows
The Scottish economy grew by 4.7% during April to June 2021, according to figures released by the chief statistician.
Change in gross domestic product (GDP) is the main indicator of economic growth. Over the year, compared to the second quarter of 2020, the economy has grown by 21.7%.
During the second quarter output in the Construction sector grew by 3.3%, output in Production grew by 3.5%, and output in the Services sector contracted by 5.2%.
The second estimate of GDP for the second quarter of 2021 will be available in Quarterly National Accounts Scotland, published on 3 November. The first estimate of GDP for the third quarter of 2021 will be published on 15 December.
9am: Markets hold firm despite inflation hike
Blue chips were unmoved despite inflation racing ahead amid signs of slowing growth.
Richard Hunter, head of markets at Interactive Investor, said: “Concerns over profit margins given the pressures on raw materials have begun to surface ahead of the upcoming third-quarter reporting season around the beginning of October.
“In addition, possible corporate tax hikes could put further pressure on profits, especially compared to the highly successful recent second-quarter round of results.”
The FTSE 100 was unchanged at 7,034.13.
7.20am: Inflation hits 3.2%
Inflation rate rose to 3.2% in the year to August from 2% in July, the biggest increase since 1997 and well ahead of the Bank of England’s 2% target.
However, the Office for National Statistics said August’s price increases were “temporary”, caused by the effects of the pandemic.
Eating and drinking out cost more last month in comparison with August last year, when the Eat Out to Help Out Scheme was running and diners got a state-backed 50% discount on meals up to £10 each on Mondays, Tuesdays and Wednesdays.
7am: Restaurant Group making ‘good progress’
The Restaurant Group which operates 400 outlets under the Wagamama, Frankie & Benny’s and Brunning & Price brands, posted total sales of £216.8m in the first half (2020: £227.2m).
Adjusted EBITDA came in at of £11.2m despite the impact of significant trading restrictions in the period (2020: Adjusted EBITDA loss of £18.3m).
Andy Hornby, chief executive, commented: “We have made good progress in the past six months, securing the refinancing and recapitalisation of the group in the first quarter before focusing our attention on the re-opening of the business and welcoming back dine-in customers as government restrictions eased.
“Whilst there are some well documented sector challenges to navigate in the short-term, particularly around labour availability and supply chain, we believe the Group is well positioned for the long- term.”
7am: Omega Diagnostics ‘confident’
Drugs developer Omega Diagnostics is “well positioned for exciting growth” in the second half of the year, according to chairman Simon Douglas, in update to shareholders ahead of today’s annual general meeting.
The health and nutrition division continues to show early signs of recovery towards pre-pandemic revenue levels, and there is a strategic plan in place to deliver substantial growth from this division, particularly given the opportunities in both China and the US.
In the global health division, the Alva-based company remain optimistic about the long-term prospects for the roll-out of its HIV device.
Following positive feedback the firm is confident it can reach between 4m and 6m tests a year within the next three to five years, representing an opportunity to generate £12m to £18m in annualised revenues.
“We also remain confident in delivering significant value from opportunities within the COVID-19 testing space,” said Mr Douglas.
“Our positive dialogues with the third parties introduced to us by the Department of Health and Social Care are advancing and we are optimistic that these will conclude successfully and positively impact on our H2 performance.”
7am: Tullow in profit – CFO leaves
Tullow Oil, which is focused in Africa and South America, said net profit came in at $92.7m for the six months to the end of June, from a loss of $1.33 billion last year due to impairment charges.
It narrowed 2021 production guidance toward the upper end of the range.
The company said that its Les Wood, its chief financial officer and executive director, has mutually agreed with the board that he will step down.
Shares in Asia slipped as weak economic data in China reinforced worries about slowing growth amid concern over the ever-present pandemic and the tapering of stimulus measures by central banks. Tokyo’s Nikkei 225 was 0.53% lower.
Worries about slowing growth spread to Wall Street and saw the Dow Jones Industrial Average fall 0.84%, while the S&P 500 fell 0.57% and the Nasdaq Composite was down 0.45%.
Oil prices gained on a larger than expected drawdown in crude oil stocks in the United States, with US crude gaining 0.51% to $70.82 a barrel and Brent crude rising 0.46% to $73.94 per barrel.