11th Aug 2021 09:06
(Alliance News) - Stock prices in London opened higher on Wednesday amid strong UK company earnings reports and as the US government's infrastructure spending bill won Senate approval.
On Tuesday, the US Senate voted for Joe Biden's massive USD1.2 trillion infrastructure plan, paving the way for a major victory to the president if it wins final passage in the lower chamber of Congress.
The FTSE 100 index was up 31.58 points, or 0.4%, at 7,192.75. The mid-cap FTSE 250 index was up 61.21 points, or 0.3%, at 23,633.26. The AIM All-Share index was up 0.1% at 1,266.60.
The Cboe UK 100 index was up 0.4% at 716.30. The Cboe 250 was up 0.2% at 21,406.35, and the Cboe Small Companies up 0.1% at 15,460.34.
The Japanese Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong was flat in late trade. The S&P/ASX 200 in Sydney ended up 0.3%.
In the FTSE 100, Avast was the best performer, up 2.9%, after the cybersecurity firm posted positive results, as it nears a takeover by larger US peer NortonLifeLock.
For the six months to June 30, revenue was up 8.8% at USD471.3 million from USD433.1 million the year before, and pretax profit was USD269.3 million, more than double from USD115.3 million.
In addition, billings were USD482.7 million, up 2.9% from USD469.1 million the year prior.
Late Tuesday, US cybersecurity firm NortonLifeLock said it agreed with Avast on the terms of a merger. The deal is in the form of a cash and share takeover offer by Norton for Avast. Under the terms of the merger, Avast shareholders will be entitled to receive a combination of cash and newly issued shares in Norton, which was formerly known as Symantec.
Based on Norton's closing share price of USD27.20 on July 13, being the last trading day for NortonLifeLock shares before combination talks were revealed on July 14, the merger values Avast between USD8.1 billion and USD8.6 billion, depending on Avast shareholders' elections.
The offer values each Avast share at 608.40 pence, and they were trading short of this, at 585.00p, early Wednesday.
Spirax-Sarco Engineering was up 2.5% after the steam systems engineer reported a strong first-half and raised its dividend.
For the six months to June 30, revenue rose 13% to GBP643.7 million from GBP569.7 million last year, and pretax profit increased to GBP150.0 million, up 41% from GBP106.3 million.
Spirax-Sarco declared an interim dividend of 38.5 pence, up 15% from 33.5p paid last year.
Looking ahead, the Cheltenham-based firm expects its second half operating margin to be similar to the first half margin of 24%.
International Consolidated Airlines Group was up 1.5% after Liberum raised the British Airways-parent to Buy from Hold.
At the other end of the large-caps, Phoenix Group was the worst performer, down 2.1%. The life insurer said it made further strong progress on its focus on cash, resilience and growth.
For the six months to June 30, revenue fell to GBP2.1 billion from GBP2.48 billion last year, and it swung to a pretax loss GBP454 million from a profit of GBP611 million.
Phoenix pointed to an adverse investment return on hedging positions, as well as increased amortisation charges on intangible assets and higher financing costs.
More positively, Phoenix said its cash generation in the first half doubled to GBP872 million from GBP433 million last year. The company added it was track to deliver at the top end of its guided annual cash generation target range of GBP1.5 billion to GBP1.6 billion.
National Grid was down 1.1%. Alongside fellow utility SSE, the UK power lines operator noted noted the provisional decision by the UK competition regulator on appeals they had filed against the RIIO-2 price control.
SSE shares were 0.1% lower.
Both noted the Competition & Markets Authority upheld their appeal over the so-called 'outperformance wedge' but not on the cost of equity. Both said they will discuss the provision ruling with the CMA ahead of its final determination in October.
Still due out Wednesday morning are half-year results from blue-chip insurer Prudential. The stock was firm at 0.1% ahead of the announcement.
The dollar was strong following the Senate vote and ahead of the US inflation reading in the afternoon.
The pound was quoted at USD1.3825 early Wednesday, down from USD1.3847 at the London equities close on Tuesday.
The euro was priced at USD1.1708, lower from USD1.1724. Against the Japanese yen, the dollar was trading at JPY110.70, up from JPY110.52.
Brent oil was quoted at USD71.01 a barrel Wednesday morning, up from USD70.92 late Tuesday. Gold was trading at USD1,731.07 an ounce, higher against USD1,726.99.
Wednesday's economic calendar has the US inflation print at 1330 BST.
By Arvind Bhunjun; [email protected]
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