Markets calmer | Biffa agrees takeover | AG Barr ‘strong start’
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4pm: Market calm, but property stocks hit
Shares of blue chip companies clawed back into positive territory before falling at the close to end the session below the 7,000 threshold as investors digested Bank of England economist Huw Pill’s warning on borrowing costs.
He said it is “difficult not to conclude” the Bank must hike interest rates steeply at its next meeting on 3 November after markets were rocked by chancellor Kwasi Kwarteng’s tax bonfire.
The FTSE 100 index was 36.36 points down on the day at 6,984.59.
Mining shares were among the main rises, on hopes that a relaxation of China’s COVID-19 restrictions could provide a lift to the global economy.
Glencore was up 4.29%, Antofagasta added 3.38%, Anglo American was 3.19% better and Rio Tinto rose 2.55%.
But property stocks were the day’s biggest losers on fears over sharp interest rate rises.
Rightmove was down 8.67% and Barratt Developments fell 4.83%.
The pound was up 0.0957% at $1.0777 after hitting an all-time low on Monday.
But UK gilt yields continue to rise, with the 10-year up 15 basis points at 4.433% and the 30-year jumping 34 basis points to 4.887%.
7am: Biffa agrees £1.3bn takeover
Biffa has agreed to be taken over by private equity firm Energy Capital Partners in a deal valuing the British waste management company at about £1.3 billion, the companies have announced.
The 410 pence per share deal, which comes nearly three months after Biffa first announced that it was approached by ECP, will be backed by the board, Biffa said in a statement, adding that it considers to terms to be “fair and reasonable”.
7am: AG Barr
Irn-Bru maker AG Barr said adjusted half-year profits before tax rose 22.8% to £25.3m from £20.6m on a 20% rise in like-for-like revenue to £157.9m.
The board has declared an interim dividend for the 26 weeks ended 31 July 2022 of 2.5 pence per share (2021/22 : 2.0 pence).
Roger White, chief executive, commented: “We made a very strong start to the year and continue to see good momentum across our business and brands. That said, the UK’s high level of inflation has accelerated across the summer and is creating a well documented cost of living crisis for many consumers, alongside increasing challenges for industry.
We continue to take action to mitigate the cost pressures we face both in the short term across the balance of the current financial year and where possible into 2023.
We anticipate in the coming months that the current economic environment will impact consumer purchasing behaviour, however we currently remain confident that our strategy and actions will allow us to deliver a full-year profit performance ahead of the prior year.”
7am: Saga warning
Holidays and financial services company Saga returned to an underlying profit for the six months to 31 July, as it was able to resume more normal cruise and travel operations. It said it was in a stronger position than before the pandemic, but warned that that it will not hit guidance for earnings.
Ocean Cruise business secured strong bookings and is on track to achieve its targets for this year and next.
Total insurance policies in force, across all products, grew by 3% compared with the first half of the prior year, led by the recovery of travel insurance.
Although sales of new motor and home policies were lower than the prior year, customer retention improved and margin per policy was in line with 2021/22
Sales of new travel insurance policies returned to similar levels as before the pandemic, while private medical insurance sales were broadly in line with the prior year.
Saga Money is ahead of the same point in the prior year.
The group delivered an underlying profit before tax of £14m for the first half, compared with an underlying loss of £2.8m in the prior period.
The reported loss before tax of £257.5m reflects a £269m impairment of Insurance goodwill, representing a reduced view of future motor and home margins per policy, as signalled in the company’s July trading update. At 31 July, £449.6m of Insurance goodwill remained on the balance sheet.
Stronger trading in Asia gave some comfort to investors following another downward session on Wall Street.
Sterling remains in focus which came off its record lows amid wider currency fluctuations which have prompted volatility on stock markets.
The FTSE 100 index closed 2.35 points higher at 7,020.95 on Monday and was called higher today.
In New York, the Dow Jones Industrial Average closed 1.1% lower, the S&P 500 1.% down, and the Nasdaq Composite was 0.6% off. It was a fifth successive day of declines for US equities, though analysts at ING noted selling pressure is abating.
Equities in the Asia Pacific region were largely higher on Tuesday. The Nikkei 225 index in Tokyo was 0.5% higher in late trade, while the S&P/ASX 200 in Sydney was up 0.3%. In China, the Shanghai Composite was up 0.5%, though the Hang Seng in Hong Kong was down 0.8%.