Market report

Gym Group ahead | National World | Aviva | Petrofac


5pm: London shakes off Bank decision

London traders shrugged off the surprise hike in the interest rate and surge in the pound to drive shares to a positive close.

The FTSE 100 ended the session up 89.86 points or 1.25% at 7,260.61, and the FTSE 250 was ahead 0.95%.

Sterling was last trading up 0.44% on the dollar at $1.3321, and strengthening 0.3% against the euro to change hands at €1.1780.

“Markets have taken today’s Bank of England rate rise in their stride, with the pound gaining ground as a result,” said IG senior market analyst Joshua Mahony.

“The decision to raise rates in the face of an ongoing Omicron surge does serve to highlight the feeling that this wave could be much shorter than previous occasions.

“Banks are on the front foot today, whereas Boohoo’s profit warning has hindered sentiment for the wider sector.”

Banks were boosted by the rate rise, Lloyds Banking Group up 4.63%, Standard Chartered ahead 3.89%, HSBC rising 3.69%, and Barclays 3.21% firmer.

12.30pm: Bank hikes interest rate

The Bank of England today defied expectations and raised interest rates for the first time in three years.

The rate setting committee voted 8-1 in favour of lifting rates 15 basis points from a record low 0.1% to 0.25%.

It comes as inflation has soared to over half the Bank’s target, hitting 5.1%, the highest level in over 10 years.

Sterling strengthened while the FTSE 100 was off its highs for the day. Full story and updates here

FTSE 100 at 12.30pm

9am: London opens higher

The FTSE 100 was trading 76.76 points higher at 7,247.51.

7am: Gym Group running ahead

Gym group

Gym Group said it had seen atrong recovery in membership numbers following re-opening. Total member numbers grew from 547,000 in February 2021 to 753,000 at the end of October. In line with seasonal norms, membership has since declined to 735,000 as at 30 November.

Headline prices continued to increase through the second half and take-up of the premium multi-site membership, LIVE IT, increased to 27.1% by the end of November.

The company is trading in-line with market expectations for FY2021 for its key profit measure of group adjusted EBITDA Less Normalised Rent

It remains on track to deliver its organic rollout plan targeting 40 openings in the 18 months to December 2022.

Richard Darwin, chief executive, said: “The recovery in our membership following the reopening demonstrates the essential role gyms play in people’s lives. 

“The market opportunity and growth potential for The Gym Group is very exciting. 

“Whilst we are mindful of the near-term uncertain outlook as a result of the new Covid variant, we have the growth strategy, financial resources and expertise required to capitalise on those opportunities, widening access to inclusive and affordable gyms for all over the long term .”

7am: National World progressing

Media group National World, whose titles include The Scotsman newspaper, said performance in the second half of the year has remained robust and the board expects the full year adjusted results to be substantially ahead of the company’s expectations.

Full story here

7am: Aviva extends buyback

Insurance group Aviva will increase and extend its share buyback programme announced on 12 August from £750 million to a maximum of £1 billion.

The total maximum number of shares to be acquired under the Programme is increased to 392 million and will now complete no later than 31 March 2022. 

Amanda Blanc, group chief executive, said: “We are increasing our share buyback to £1bn as part of our commitment to return at least £4bn to ordinary shareholders.

“We will update further on our capital return and dividend plans at our full year results in March 2022.”

7am: Petrofac ‘well positioned’

Petrofac said is is well positioned with a $40m pipeline of orders, of which $7bn is in mew energies where it sees significant near and long-term growth in areas such as offshore wind, carbon capture, waste to value and hydrogen.

Group net profit is broadly in line with market expectations.

Full year engineering and construction revenues are expected to be approximately $1.9 billion, compared with $3.1 billion in 2020, with the reduction due to the continuing impact of Covid-19 on project progress together with low order intake in previous years. 

Net margins are expected to be below prior year due to unrecoverable Covid-19 related cost increases, partly mitigated by management actions to reduce costs and by tax provision releases.

Engineering and production services revenue is forecast to be significantly higher than in 2020 while revenue and EBITDA for integrated energy services are expected to be higher in the second half.

Sami Iskander, Petrofac’s group chief executive, said the recent refinancing has provided a long-term, stable capital structure for the business and largely completes the work to rebalance the group. 

Global markets

London’s FTSE 100 was expected to surge this morning in spite of the wave of Omicron infections sweeping through the UK.

Spread betters were forecasting an 82 points rise, more than recovering yesterday’s loss of 48 to 7,171.

Traders are encouraged by Boris Johnson’s comments that he has no immediate plans to shut pubs and restaurants, and by receding chances of an interest rate rise being announced today by the Bank of England, despite inflation now more than twice its target.

Wall Street stocks closed higher on Wednesday, after the Federal Reserve confirmed it would ramp up its tapering and signalled three rate hikes next year.

The Dow Jones Industrial Average closed 1.087% higher, the S&P 500 added 1.63% to 4,709.85 and the Nasdaq Composite was 2.15% ahead.

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