Market report
Car output rises | Petrofac landmark | SSE | Scotgold
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4.30pm: Investors regain confidence
The FTSE 100 closed 56.16 points higher at 7,620.43 as Investors worries about the banking system fade.
The market was lifted by a broad range of sectors including retail, banking, travel and property.
“That suggests confidence is rebuilding among investors who have been shaken by the rapid unfolding of issues concerning a handful of US and European banks, and as expectations for interest rates once again swerved in a new direction,” said Russ Mould, investment director at AJ Bell.
Petrofac soared 34.29p (69.89%) to 83.2p after it won a place on a €13bn framework agreement to help expand offshore wind capacity in the Dutch-German North Sea (see below).
“Judging by the previous share price trend, Petrofac needed all the good news it could get, as the stock had slid from circa 600p in 2018 to 50p last week.,” said Mould.
Drax Group saw a reversal of earlier losses, with its shares up by 5.48% after it insisted it still plans to install carbon capture technology at its power plants, despite the government rejecting its plans to introduce the technology at a power plant in England.
Energy firm SSE rallied 4.14% after it lifted its full-year earnings per share guidance (see below). The company cited a strong performance from its flexible generation plant and said it now expected adjusted earnings per share of more than 160p for the 2023 financial year.
Quite a few companies saw their share prices dip as they traded without the rights to the next dividend, including Aviva, Taylor Wimpey, Mondi and Moneysupermarket.
7am: Car production jumps
Car production in British plants rose strongly last month as supply chain shortages eased and strong demand for electric vehicles.
Output rose 13.1% year-on-year to 69,707 units, with the number of hybrid, plug-in hybrid and battery electric vehicles produced rising to 27,392 from 15,905 a year previously.
According to the Society for Motor Manufacturers and Traders (SMMT), a total of 56,634 cars were made for export, or for 81.2% of output, up from 50,786 a year previously.
Most headed to the European Union, with demand helping to offset falls in sales to the US and China, down 19.1% and 21.6% respectively.
Mike Hawes, SMMT chief executive, said: “February’s growth in UK car production signposts an industry that is on the road to recovery. The fundamentals of the sector are strong.
“The take advantage of global opportunities, however, we must scale up at pace and make the UK the most attractive destination for automotive investment by addressing trading and fiscal costs and delivering low carbon, affordable energy.”
7am: SSE raises earnings forecast
SSE has raised its annual earnings expectations and intends to recommend a full-year dividend of 85.7p per share plus RPI for 2022/23 followed by a rebase to 60p in 2023/24 to support the Group’s significant investment plans.
Thereafter, dividend increases of at least 5% per annum are targeted for 2024/25 and 2025/26.
The company said it now expects its 2022-23 adjusted earnings per share to be more than 160 pence, compared with the previous guidance of more than 150 pence.
It said the revision reflects the strength and stability of SSE’s balanced mix of regulated and market-facing businesses and the continued narrowing of the range of probable financial outcomes for the period.
In particular, continued strong performance from flexible generation plant to support security of supply has more than offset the lower than planned renewables output and associated hedge buy-back costs
Financed director Gregor Alexander said: “As we progress our ambitious Net Zero Acceleration Programme, we are investing more than we make in profits into the infrastructure society needs for a more secure, affordable and clean energy system. Our balanced business model has performed well in a volatile year, helping to ensure security of supply.
“At the same time, we are progressing multiple projects and adding to our pipeline as we deliver on our net zero focused electricity infrastructure strategy. This strong performance leaves us well positioned to continue our significant investment programme and we will update the market with more detail in May.”
7am: Petrofac-Hitachi partnership
Petrofac and Hitachi Energy have been selected by TenneT, the Dutch-German Transmission System Operator, to supply multiple offshore platforms and onshore converter stations to accelerate the integration of bulk renewables into European power grids.
The €13bn agreement includes an initial commitment to deploy six record-breaking renewable integration systems, five of which will connect offshore wind farms to the Dutch grid and the sixth to the German grid. Each of these connection systems has a capacity of 2GW and a voltage level of 525 kilovolt – a world-first for offshore wind.
The landmark Framework Agreement represents the largest in Petrofac’s history. It enables Petrofac and Hitachi Energy to plan in advance, secure the required resources and yard space, as well as capturing synergies between successive projects to meet in-service dates.
Petrofac will undertake the engineering, procurement, construction and installation of the offshore platforms and elements of the onshore converter stations. Hitachi Energy will supply its HVDC Light converter stations, which convert AC to DC power offshore and DC to AC onshore.
7am: Scotgold
Scottish gold miner Scotgold has confirmed that it is in advanced discussions to secure a $500,000 advance to assist with short-term working capital following a setback in production.
The directors of the company have also discussed, if the need arises, the provision of additional working capital, in the form of equity or a short-term convertible loan.
The company posted loss before taxation in the first six month of A$9.5m (H1 2022: A$5.3m).
It supplied made the first Scottish gold doré sales to Scottish jewellery companies in December 2022 totalling £25,420.
7am: Moonpig
Trading performance at the greetings card company Moonpig has been resilient across the second half of the year to date and it recorded its largest ever week of sales in the UK ahead of Mother’s Day.
Accordingly, expectations for group annual revenue for the year ending 30 April 2023 remain unchanged at around £320 million.
Expectations for full year Adjusted EBITDA also remain unchanged, reflecting its disciplined approach to indirect cost management and its flexible business model..
Looking forward, it remains “mindful of the macroeconomic environment”, but expects revenue to be in growth across FY24, with the rate of growth weighted towards the second half of the year.
6am: Scottish economy
The Scottish economy will contract by 0.7% this year, before returning to annual growth in 2024 of 0.9%, according to the latest Deloitte sponsored Fraser of Allander Institute commentary.
This figures are a slight revision upwards from the Institute’s previous set of forecasts in February, reflecting the more positive than expected economic data at the beginning of 2023.
Global markets
US stocks advanced strongly as a series of upbeat earnings reports focused minds away from the recent turmoil in the banking sector.
The Dow Jones Industrial Average jumped 1%, the S&P 500 did better, gaining 1.4%, while the Nasdaq rose by 1.8%.
Investors sentiment was more mixed In Asia. The Nikkei 225 index in Tokyo was down 0.8%. In China, the Shanghai Composite and Hang Seng index in Hong Kong both rose 0.1%.
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