FTSE 100 Live Aug 04: Bank of England to hike interest rates, Next rise in earnings forecast

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Go-Ahead takeover continues after £670m bid increase

London bus and commuter rail operator Go-Ahead Group has been bought for £670million by Australian Kinetic Holding and Spanish operator Globalvia Inversiones after the company accepted an increased takeover bid.

The Newcastle-based company operates almost a quarter of London buses and Govia Thameslink Railway, made up of Great Northern, Thameslink, Gatwick Express and the Southern Network.

It originally agreed in June to be bought by the consortium for £647.7m, but another Australian public transport company, Kelsian, said it would not make a rival approach, citing ” volatile and external events” for the decision.

Under the terms of the increased offer which includes a special dividend of 100 pence, Go-Ahead shareholders will receive 1,550 pence for each share. The previous approach called for a special dividend of 50 pence per share.

Michael Sewards, Co-CEO of Kinetic, and Javier Pérez Fortea, CEO of Globalvia, said: “This transaction will create a leading global multimodal transit platform. Given our track record and experience, we will provide long-term capital and expertise to support the acceleration of the Go-Ahead strategy and the transition to net zero.

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Flying lift sales return to Rolls-Royce

Rolls-Royce said today it expects its engine flight times to return to pre-pandemic levels in 2024 as revenues continue to recover, but warned of problems recruiting engineers in the tight UK labor market.

The company is paid by customers based on the number of hours its world-renowned engines are used, so its revenue streams were hit hard when airlines were grounded during travel restrictions from Covid-19. H1 underlying revenue was £5.3bn, up 4%, helped by an increase in flight time as air travel returned.

“Engine flight hours are expected to maintain the current trajectory and return to pre-pandemic levels in 2024 as global travel restrictions are lifted,” he said, noting an underlying loss. of £188 million for the period. The Derby-based company also said when recruiting: ‘We encountered difficulties when recruiting, particularly for experienced engineers.

“We are actively managing the impacts of a number of challenges, including rising inflation and supply chain disruption, with a greater focus on pricing, productivity and costs,” the CEO said. Warren East, who announced his departure.

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Serco tips raise shares, Ocado up 5%

The recent resurgence in Serco’s share price continued today as the subcontractor produced another rise in profits.

Serco, whose public sector work includes immigration services and cycle hire in London, reported a six per cent rise in half-year underlying profit to £130m despite falling revenue due to the end of Covid-related contracts. It also raised its forecast for the full year, in addition to a sharp increase in May.

Shares have risen by a third this year and added a further 2.4p to 187.4p today as chief executive Rupert Soames said the order book rose another £500m to £14.6 billion.

Serco’s strong performance came in another robust session for the FTSE 250 index, which climbed 95.53 points to 20,114.37 after a boost from retail stocks including Marks & Spencer and Pets at Home.

Medical products company ConvaTec posted the biggest rise in the FTSE 250, with its shares up 7% or 16.8p to 247p after the company encouraged investors by announcing an unchanged dividend and also meeting its forecast for the whole year.

The performance of the FTSE 100 was more subdued, partly due to stocks such as BT, Lloyds and Unilever trading without final dividend entitlement.

The FTSE 100 slipped 19.78 points to 7425.90, with Hikma Pharmaceuticals down 9% or 161.5p to 1600.5p after lowering its full-year forecast due to the impact of “challenges persistent” in the US generics market.

The recent rally in Ocado shares continued as the grocery tech business added 6% or 55.4p to 967.6p, while Smith & Nephew rose 25p to 1075p following the results of ConvaTec. Investors also returned to Admiral shares as the car insurer rallied 49p to 1977p.

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Retail joy boosts M&S shares 2%, Rolls-Royce down 5%

Marks & Spencer and other retail stocks are up on today’s encouraging trade update from Next.

The latest signs of resilience in high street spending helped FTSE 100-listed JD Sports Fashion and B&M European Value Retail improve 2% while Next rose 152p to 6,898p.

The FTSE 100 edged up 4.61 points to 7450.29 but there was another setback for Rolls-Royce investors as shares fell 5% or 4.35p to 86.44p on the day. continuation of the intermediate results.

In the FTSE 250, M&S jumped 2% or 3.25p to 140.55p and Pets at Home rose 10.2p to 344.6p. Other second-tier stocks in the limelight include outsourcing company Serco after its half-year results sent shares up 3% or 5.9p to 190.9p.

The FTSE 250 index was 113.65 points higher at 20,132.49.

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Future actions rally on higher forecast

Next continues to defy tough retail conditions, reporting full-price sales growth of 5% in the second quarter for a £50m upgrade from previous guidance.

He said there had been a sharp reversal in lockdown trends, with in-store sales picking up and online growth returning to the long-term trajectory.

The channel said: “Many product trends have also returned to pre-pandemic standards. Lockdown winners such as home and activewear fell back, while formal wear came back into favor.

Next has raised its full-year profit forecast by £10m to £860m, ​​a 4.5% increase on last year.

Shares rose 130p to 6876p ​​today.

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US markets rally, Brent at $96

Wall Street posted a strong session last night after corporate earnings and a better-than-expected update from the US services sector eased recession fears.

Tech stocks led the rally as the Nasdaq jumped 2.6%, ahead of 1.6% for the S&P 500 and 1.3% for the Dow Jones Industrial Average.

Brent crude, meanwhile, traded at $96 a barrel today after one of the smallest production increases in OPEC history saw the cartel agree to add 100,000 barrels per day in September.

The price fell sharply yesterday as traders zeroed in on the numbers showing higher U.S. crude inventories and signs that Americans are driving less than they did in the summer of 2020.

Attention now turns to the Bank of England, where policymakers could raise interest rates by 0.5% for the first time since the Monetary Policy Committee was established in 1997.

The Bank has risen 0.25% at every meeting since December, but with little sign that any of those increases have done much to dampen inflation. The consumer price index reached 9.4% in June and is poised to rise significantly as energy prices rise.

Michael Hewson, chief market analyst at CMC Markets, said: “The Bank is understandably concerned about the effect any rate hikes could have on the UK economy, and it is undoubtedly slowing.

“However, there is no easy option here, given that they are already way behind schedule.”

CMC expects the FTSE 100 index to open unchanged at 7445.

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